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Bullboard - Stock Discussion Forum Global UAV Technologies Ltd C.UAV

Alternate Symbol(s):  YRLLF

Global UAV Technologies Ltd. is a diversified, vertically integrated drone technology company within the commercial Unmanned Aerial Vehicle (UAV) sector. The Company, through its wholly owned subsidiaries, provides a full range of UAV-based services and products, including production, research and design of professional grade UAV’s, geophysics and remote sensing survey services, and regulatory... see more

CSE:UAV - Post Discussion

Global UAV Technologies Ltd > reverse split
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Post by bayoubucks on Jul 03, 2018 1:16pm

reverse split

One reason for a reverse split is to get the price of the stock above a level required for a listing on other than the venture xchg.
The point you guys are missing is this.  The price of a stock is a function of earnings otherwise known as the PE, price to earning ratio.
If you have half as many shares as before the split, then your earnings will be twice as much.  
Example:  1 million shares
                  $1 million in earnings
                  EPS = $1
                  PE = 15x
                  Share price = 15x$1=$15

                 500,000 shares after 1 for 2 reverse split
                 $1 million in earnings
                 EPS = $2
                 PE = 15x
                 Share price = 15x$2=$30

So, no difference in your value.  1 share @ $30 or 2 shares @ $15
Comment by Sealthedeal2018 on Jul 03, 2018 1:40pm
I understand that but correct me if I'm wrong but your explanation is in favor of the company and not the shareholder? No difference in value you say? Not initially but what happens in your example if the share price doubles from $15 to $30 after the split. My math says the shareholder in your example($30x 500,000 shares would get $15,000000 half of $30,000000 if he still had his original 1 ...more  
Comment by bayoubucks on Jul 03, 2018 4:19pm
You say you understand, but you really don't.  Sorry you just don't get it.  In your logic, if the price went down it would be better to have less shares. Let's drop it, your mind is made up and you don't want to be confused with the facts.
Comment by Sealthedeal2018 on Jul 03, 2018 4:48pm
I understand completely. I've been involved in reverse splits in the past. They don't benefit the share holder. In a reverse 2 to 1 split you get half the amount of shares. A 3 to 1 reverse split you get a 3rd less shares and so on. So in your explanation, as a share holder would you rather have 1,000 000 shares or 500,000 shares if the share price goes up .01?
Comment by Sealthedeal2018 on Jul 03, 2018 5:09pm
Here you go bayoubucks, I think I understand completely https://theconservativeincomeinvestor.com/2018/05/01/reverse-stock-split-shareholder-impact/