Q#1. Can a Rev.Split ever be advantages/profitable? Q#2. Is there any rule that limits the Rev.Split I see some ratios of 1:50 and even 1:200 Q#3. What would be te best thing to do when the company anounces that a Rev.Split is considered Grrrrrrrrrrr!
If news that a company is engineering a reverse split is part of your shorting criteria, it could be good to know.
I've studied reverse splits for the 1995-2000 ish period (don't remember exact dates). Majority of companies who reversed split were heading lower before the split and proceeded to continue along with their trajectory after the split. Usually reverse splits are engineered to get around a threat of delisting because the stock was hammered so badly that it started to flunk the minimum price requirements (it's a formula, so reverse split watchers might want to track that).
I think there should be a ruling that limits the rev.split to where the exchange requirement minimum price are met and not excessively beyond that. That would give investors a chance to get out at a limited loss and gives the company a chance to make a SERIOUS effort to solve their problems. The way things are right now, there's no room to manouver.
Thanks for that. I don't find a need to consider reverse splits for my shorts, so I wasn't aware of that.