hi reverse stock splits?

Question

does a reverse stock split benefit a share holder. would it reduce the outstanding shares? so for instance if a company does a reverse stock split takes away shares in the open market and increases the stock. in that instances it should enhance the EPS becuase of less share on the open market, just like a stock buy back?

Thanks Keenan

Answer 1

It is usually a bad sign -- because companies only do a reverse stock split when the price goes down.

A company might do it to continue to be listed on an exchange. If the price drops below a certain level, they may not meet the requirements of the exchange. If the price goes too low, it also becomes much less liquid.

It does enhance EPS -- but that is just an accounting illusion, and has no economic meaning.

Answer 2

A reverse stock split reduces the number of shares in an effort to increase the price. Usually though, a stock continues to slide until the company goes bankrupt. In worse cases, the company will then reissue shares in order to raise more money, thus diluting the damage already done by the reverse split. It is rare for a reverse split to be good in the long run.

Answer 3

Run for the hills because a reverse stock split is basically a last desperation step for a company so it does not get delisted from one of the major exchanges.

In other words, it is a Huge Red Flag.

Answer 4

Reverse stock split will reduce the outstanding shares, making it less liquid (lower transaction). For more information about stock visit http://www.stockpickguide.com

Answer 5

whilst a split happens (forward or opposite) the fee updates on your portfolio as quickly because of the fact the industry opens, regardless of if it may take an afternoon or 2 on your form of shares to replace. No, they did no longer screw all and sundry. A split has no effect on the fee of your inventory.

Answer 6

usually to get the price into a higher range...no real diif for the shareholder........