RE:Reverse splits.....As you say, reverse stock splits are normally signs of a company in trouble and do it normally to remain listed.
IMO they can only do it once they can assure the market that the turnaround is well in place and I would think that would be at least one year away all things equal.
As far as shorting is concerned, in this case,
if it is not timed properly, it could well increase shorting because in this country, lowering the float does not decrease shorting by any significant amount since they could counterfeit shares at will. (naked shorting) contrary to how shorting is monitored in the US.
I would hope that the reasons would be
1- They have the turnaround confirmed and the matket sees it as such. That would also be indicated by an increase in SP in present condition and progress.
2- That would make it more doanle for institutional investors to sink in funds.
3- Last and not least, they would be eyeing inclusion into US main exchanges.
All in all I would think, they would have to get their timing right on congruent with their continued progress with market acceptance of the reverse split.
The ratio would be decided what the SP is at the time the decison is made.
Something that I will follow closely.
Of course you will have the know it all lip flappers come here and advertise their ignorance and how lowsy the company is doing how much they know.... happily I got most of those on iggy !
Acuras1 wrote: As has already been pointed out, it's not a done deal yet, but now would make sense to me.
Often reverse splits are desperate strategies to help management fight for a company's survival by extending its life for a short time. It happens all the time in the oil & gas or in the mining sector and can often be a shorters paradise because of these companies' financial weakness.
There has been a lot of progress here. Management has successfully navigated through retructuration and has "right sized" the business by shedding unproductive assets, paid down debt from asset sales, etc. .
Reducing the float should lead to less shorting by pure institutional speculators. Most very large pools of moneys, (call them serious long term investors such as pension funds, endowments and other institutions or foreign investors) don't buy stocks under $10 or $15 bucks.or more.
GLTA