RE:Should read this on 4 REASONS FOR A REVERSE SPLITHey Club.
Thanks for this article. It shows the 4 reasons for RS's, and uses an example of a Reverse split that I took part in . The Motorola split. I recall that the Phone part was doing BADLY, and the Solutions part MSI, was keeping the company afloat. So Motorola sold the Phone part of the company to Google and split MSI. I knew nothing about MSI then, so I decided to sell before the split. MSI started to do well after 4 or 5 years from the RS. The Motorola phone portion of the company that was also sold to Google Adroid, which helped Google get a bigger share of the Android pnone tech Market. But it was a total of Share Purchase for Google share exchange RS of so many Motorola shares for 1 Google share..
Hind site I could have stayed with either Google or MSI I would have done well 10 years later. I was younger then, so more aggresive, and less patient to wait.
That's what the problem here with Bombardier's RS is. I don't want to wait for a decade before I get a 10 Bagger. The company sold all the bad divisions already in our scenario. So the only thing that it's doing the RS for is, for Reason #1 bellow.
REASONS FOR A REVERSE STOCK SPLIT
So, if the market views reverse stock splits with a jaundiced eye, you may ask, why would a company decide to do such a split? The reasons are varied, and include:
1. The desire to increase the share price, especially if the shares are penny stocks. Low prices tend to elicit negative emotions in investors and inhibit the attention of the big money on Wall Street or coverage by major research firms.
2. Companies looking to create spin-offs at attractive prices may use reverse splits. Tyco International (TYC), Motorola Solutions (MSI) and Time Warner (TWX) all employed this strategy when they broke up their companies.
3. Major stock exchanges have minimum dollar amounts for the price of the stocks they list. So, to stay listed, a low-priced stock may reverse split in order to push its price to those minimums.
4. And one more reason from Thomas Rice of The Bowser Report: a reverse split may just be an attempt to extend the life of a slipping stock.
However, while the last two reasons are mostly negative, the first two can be greeted as positive strategies by investors who take their reverse splits in stride, especially if they are confident that the company is serious about a turnaround or strategy to improve its fortunes.
I still want to wait a couple years before we do a RS, so, to start
showing strong positive FCF's. We'll be there in 2023. So what is wrong doing it that way? What I'm asking really is to wait, even 1 year to 2023 to announce the RS, and do the actual split in 2024. This way the Market has a chance to see how good BBA really is. Let's face it. Management likes where we're going with FCF's & +FCF's, because they know that profits are coming in the next 3-4 years. That's why they want to reduce the FLOAT. So why do the RS Prematurily? Can't they wait for 2 years, say till 2023 to announce it, and 2024 to implament it. The point in the Bomber's RS case is to reduce the Float. This low price stigma of the shares is killing the company. But this stigma can change. All they have to do is start showing start +FCF's, and we don't have to get DILUTED to heck with these huge 20 or 30 to 1 numbers. I have a feeling that a 2 or 3 to 1 split will be the most we'll get Diluted by waiting.
IMHO. They are nnouncing the RS at least a year too early. Because this RS announcement doesn't show the strength of the company in 2022. The strength of the company will be shown in 2023/4.
That's why I think that even after the RS in 2023, the Share Price will still be played with in 2023. Untill they have a full 2023 Financials, or 2 to 3 Quarters of strong +FCF's Quarters, Bombardier will still show doubt with their +FCF, in early 2023, because their 2022 will still be weak. We've been told all this about 2022 Capex and weak +FCF already by management.
BTW we're not on the Wall Street Exchanges where "Naked Shorting" is less prominent. This Bay Street Brothel (Club), has to be shown out to be crooks by Bombardier, to be proven as crooks, here in Canada. I'm not saying that it's only Bay St, that's naked shorting here. They could be American companies, or even some local trading clubs. But this has to be pointed out to Govt's
I think we need to show STRONG +FCF's for 2 years for the Govt's to see the
"Naked Shorting" for what it really is. So they can start "Rule Changes".
The other and BIGGER reason is that we need a couple of years of strong +'ve FCF's to increase the SP to closer to $5, so we don't get diluted to shreds here. So for these 2 reasons, I'm willing to wait 2 years. Because without the strong +fcf's there is no GUARRANTEE that the R/S SP, won't be played with again. This Canadian TSE has to change, and Bombardier can be the poster child for this change. I for one, am tired of these idiots comming here on this Board, and making fun of this Company. This Company can change things. Bombardiers Management has changed the company to a profitable one, now they can help show GOVT'S & Exchanges, who these thieves are, with this 1 to 2 years event. If they do this 1 to 2 year
PATIENT route, it will probably pay of. Or at least give us a better chance to succeed. This 1 year patience play, will stop us from getting DILUTED and get "2 birds stoned at once". Just give it some thought. Enjoy the day. Cheers
clubhouse19 wrote: https://cabotwealth.com/daily/stock-market/four-reasons-for-a-reverse-split/
Looks like a catch 22 situation
Like it says, the compaby, if going through this, has to be pretty well certain that their turn arouind plan will succeed