question about the stock market

[DaVortex]

I received an email from the company I invest in asking me to vote for a 1 FOR 10 REVERSE STOCK SPLIT. This is a penny stock...

does this usually mean good news or bad news for the stock

 

[GasX]

It means that the stock is worth so little that noone will trade it. By doing a reverse split, they raise the stock price to something that will interest investors. It is not a bad thing per se, it is just an indicator that the stock is already in the crapper. It at least shows a desire to remedy the situation.

 

[Hector13]

when you say "penny stock", how cheap do you mean? I think the actualy definition may include stocks up to $2 (or even $5.. don't remember for sure).

They may be having a reverse split cause they are about to get delisted (if they are a listed stock at all). What stock is it?

 

[chowderhead]

Originally posted by: Mwilding
It means that the stock is worth so little that noone will trade it. By doing a reverse split, they raise the stock price to something that will interest investors. It is not a bad thing per se, it is just an indicator that the stock is already in the crapper. It at least shows a desire to remedy the situation.

doesn't it also mean that if approved, the company will convert ten shares of YOUR stock into 1 share (decreasing the total amount of stock outstanding). If you bought 1000 shares, you will end up with 100 shares. Priceline did this a while back.

 

[DaveSimmons]

doesn't it also mean that if approved, the company will convert ten shares of YOUR stock into 1 share (decreasing the total amount of stock outstanding). If you bought 1000 shares, you will end up with 100 shares. Priceline did this a while back.

Yes, but the only reason this is done is because the stock price has fallen too far and (if ilisted) is about to be de-listed. Listed or not, the company is in trouble and is a very risky investment.

 

[zillafurby]

i rember from the implosion that $1 is the delist level on nasdaq.

so a 20c stock with this 'coagulation' will become $2, not enough for margin deposit tho is it? (which is$6 i think).

 

[Zenmervolt]

You're kind of in a lose-lose situation. As others have said, such reverse splits (especially ones so large) typically indicate that the company is rather desperate to raise the price per share of its stock. On the other hand, if they don't do this, they are almost certainly screwed. I'd vote for it and then unload my position on the very next spike in value (or even immediately).

ZV

 

[zillafurby]

Originally posted by: Zenmervolt
You're kind of in a lose-lose situation. As others have said, such reverse splits (especially ones so large) typically indicate that the company is rather desperate to raise the price per share of its stock. On the other hand, if they don't do this, they are almost certainly screwed. I'd vote for it and then unload my position on the very next spike in value (or even immediately).

ZV

exactly if you have any clue about this stock, and its in a bad way.

if it ranges, get out when it hits to top of the range

if its in trouble and has erratic news flow, get out immediately.