TSXV:CLAS.H - Post by User
Comment by
Amazighon Jun 09, 2021 5:13pm
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Post# 33359585
RE:Those who assume a Reverse Split is the solution are naive
RE:Those who assume a Reverse Split is the solution are naive
Why companies perform reverse stock splits? The most obvious reason for companies to engage in reverse stock splits is to stay listed on major exchanges. On the New York Stock Exchange, for example, if a stock closes below $1 for 30 consecutive days, it could be delisted. A reverse stock split could raise the share price enough to continue trading on the exchange. But there are other reasons. If a companys share price is too low, its possible investors may steer clear of the stock out of fear that its a bad buy; there may be a perception that the low price reflects a struggling or unproven company. To fight this problem, a company may use a reverse stock split to increase its share price. In either instance, a reverse stock split could be a red flag to investors, but this isnt always the case. Here are two basic outcomes of a reverse stock split: Positive. Often, companies that use reverse stock splits are in distress. But if a company times the reverse stock split along with significant changes that improve operations, projected earnings and other information important to investors, the higher price may stick and could rise further. In this instance, the reverse stock split was a success for both the company and its shareholders. Negative. If the company doesnt successfully improve its operations along with initiating the reverse stock split, its stock price could continue to slide, sparking even more concern over the companys fate. In most cases of RS indeed you are right that it doesn't work out. However, there are companies which have done RS accompanied with good PR's who succeeded. In my opinion, CLAS is the exception of the rule and will succeed. So, wait and see what happens after 17 June, before judging.