If a stock does a reverse split does it mean my stock is worth more?

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, very cheap stocks - such as one well under $5.00 are often considered a poor risk and disregarded by most 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.

The other reason to do the reverse split is for earnings. In our example, earnings are also 10X larger as well, so that'll help show how a company is doing. Instead of 0.04 or 0.05, 4.4c will now show as 44c. That'll help the valuation be more accurate.

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.

I say do your homework and see.

But as you see, the actual stock is worth the same. You still own the same percentage of the company before and after the split.

Cheers!

Answer 2

Yes, but not really. Example: If you own 100 shares at $5 each, and you have a 2:1 reverse split, you will have 50 shares worth $10. You have the same total worth of stock, but less of it. Make sense?

Answer 3

Sometimes it does. Most of the time when it does a reverse split it means they are trying to get some of their stock off the market and can't afford to buy it. Usually means the company isn't doing that well but still has hopes of improving.

Answer 4

A few years ago my Palm stock did a reverse split. From what I understand, its usually not a good sign. They bundle say 5 stocks into one to try to bump the price/per to a higher amount to make it more attractive. It doesnt necessarily make your stock worth more.

Answer 5

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The good news about penny stocks is that you can buy a good amount of shares without going broke. It’s thus easier to get a good stake in a company for less than you would pay for stock of a larger organization. To find a company that you feel confident investing in, make sure to do your research. Don’t just choose a company because you saw an article about it, or because your friend is investing in it.

Answer 6

The price is higher but the stock is worth the same since there are less shares outstanding.

Answer 7

You misunderstand the industry; the easily form of shares is incomprehensible, this is the underlying fee that concerns. think of approximately it, could you be any richer or poorer having a hundred pennies or a single greenback bill? The opposite chop up grew to become into engineered to boost the "single proportion" value extreme adequate to maintain your shares on the substitute, somewhat than figuring out to purchase and merchandising "over-the-counter". in case you get carry of "screwed" (and see you later as you have not bought, you have not been screwed yet) it grew to become into by ability of AIG administration and accountants. AIG nonetheless has a "e book fee" of approximately $sixteen (which ability in the event that they bought all their materials the next day morning, paid off their duties, and chop up what's left between the shareholders, you're able to get $sixteen a proportion), that's only $2 wanting the present figuring out to purchase and merchandising value. when you consider that AIG are suffering yet are nonetheless doing corporation and incomes salary, they have a "trouble-free industry fee" some distance greater than $18/proportion, so which you would be clever to hold on. coverage isn't likely everywhere. Do your self a want and supply up paying interest to the marketplace for a decade or so, once you do look back you would be very pleasantly stunned.