is a reverse stock split good or bad?

Answer 1

A reverse stock "split" usually happens when a company's stock has perfomed so poorly that the stock is in danger of being delisted from a stock exhange. Also, a very cheap stock - such as one well under $5.00 - is often considered a very poor risk and disregarded by mutual funds and stock analysts. A company does a reverse - say 1 for 10 reverse of a stock selling for $2.00 - in order to raise the price to $20.00. For every 10 shares you had worth $2.00, you now own one at $20.00. The reverse doesn't change any of the fundamental reasons that the stock was doing so lousy in the first place. Most financial advisors would suggest staying away from the stock unless you love high-risk gambling or unless you are really confident you know a lot more about the company than the rest of the investment community knows about it.

Answer 2

Technically you are losing no value. Your 10 shares at $5, just became 5 share at 10$. You still have $50 in shares. It does probably indicate that the stock has been dropping, but this is not a concrete indicator of its future performance.

Answer 3

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Answer 4

It allows funds to purchase shares they normally would not.

Answer 5

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Answer 6

From a value point of view... it makes no immediate difference.

Historically, it has been an advance warning that the value of your investment is going down (not all the time... but enough to where you should be concerned).

Answer 7

Bad.

Answer 8

Not necessarily bad, but probably bad.

Answer 9

I think statistically, splits don't matter, either way..

Answer 10

bad...it's the kiss of death