Reverse Stock Splits -- Are reverse splits good or bad for the stock price ?

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Reverse Splits
Good or Bad?

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Disclaimer:
This is not legal or investment advice of
any kind.
You are on your own.
These types of stocks are VERY risky.
You could easily lose all your money.

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How do Reverse Splits
affect stock price ?

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We are going to do a series of articles
on reverse stock splits -- what happens
to the stock price and a series of legal
and IR tips for companies that want to
do them, so be sure to subscribe
because you will not want to miss this
vital information.

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Knowing how reverse splits
affect stock prices is vital.

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It is important to
companies contemplating
reverse splits
to know what might happen
to their stock price.

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It is important to stock traders and
investors to know what will happen to
the price of the stock after the
announcement and in the longer term.

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It seems to be a matter of general
knowledge among stock professionals
that a small cap stock that does a
reverse split will see its stock decline
to the price that the stock started at.

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In other words, if the stock was trading
at five cents and did a one for ten
reverse split, it should sell at fifty
cents, but the theory is that the stock
will eventually go back to five cents.

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If true, this would show management
the futility of reverse splits, and would
show traders a way to select stocks to
short or to sell.

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We examine this hypothesis here by
looking at some stock price charts.

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SMTP reverse split
of five to one
announced on
January 3, 2014.

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OWOO reverse
split of 750 to one
January 2014.

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DSNY reverse split
of five to one was
announced
January 8, 2014

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GNCP denies
wanted a reverse
split on January
10, 2014. The
stock goes up in
March, then
declines.

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HRTX split of 20
to one announced
on January 14,
2014. The stock
moves up, then
declines

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TBIO reverse split
announced
January 16, 2014.

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HBRM reverse
split announced
on January 27,
2014.

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DARA reverse
split of five to
one announced on
February 6, 2014.
The rest is a
decline.

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MYOS reverse
split of 50 to one
announced
February 10,
2014.
Stock goes up.

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MDHI reverse split
announced
February 20,
2014.
Stock is soft.

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COOL reverse split
was announced in
June 2014. Large
decline follows.

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DJAK reverse split
of 20 for one was
announced on
February 20.
2014.

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GARB canceled a
reverse split on
February 20,
2014.

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TRXC reverse split
of five to one was
announced on
April 1, 2014.
Sharp drop, then
sideways.

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PPRTF reverse
split of two for
one announced on
April 2, 2104,
followed by
decline.

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CGCC reverse split
of 20 to one was
announced on
April 4, 2014.

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GNUS reverse
split announced
on April 7, 2014.
Stock shows
signs of life but
moves down over
time.

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It seems to me to be fair to conclude as
follows:
In low priced, speculative stocks, the
announcement of a reverse split is
usually short term negative for the
price. Stocks with reverse splits
usually decline over time.

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More Coming
We are going to go deeper into this
subject in the future. Subscribe
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securities law,
email me at
John.Lux @
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