Reverse stock split

Well, along that journey, the right decision isn't always the popular decision.

You know, and I think that's a lot of what you saw with reverse splits, right? They scare a lot of people.

They don't really understand.

A lot of times you would see it with companies, you know, that were distressed.

Well, I know that if we wouldn't have taken that action, I don't think we'd be seeing the success we're seeing right now, because we had to make sure as a team that we break down every barrier to someone that wants to allocate capital.

And with a low stock price, we were artificially putting up a barrier that was within our control to solve.

And that's why you go and do these reverse splits.

You don't want an institution to be boxed out purely because your share price doesn't meet a threshold or a criteria.

Uh, today's question comes from Joe in Phoenixville, and his question is, "Hey, fellow Fools.

Curious to hear your thoughts on reverse stock splits for the purpose of avoiding a D list.

Has this ever happened to a stock you were long on? Did you hold? And how did it turn out? Appreciate the show and love listening every day." So just let's kinda set the table here, 'cause m- everybody understands, like, avoiding a D list reverse stock split.

Lou, what exactly is he talking about here, just so everyone else is up to, to speed that's listening, and has it happened to you and how'd it turn out?

[laughs]

...

while the rest of it is a bunch of Greek dry bulk shipping companies that have done seven reverse stock for, uh, reverse mergers or reverse stock splits in the past, like, 10 years.

So-

A reverse split is that's not usually good news for a company.

Companies do reverse splits when their stock price is so low that they want to boost it up by by basically reversing.

the number of shares that's outstanding and increasing that number.

So let me explain.

The split is where if you have a $10 share of stock and you do a five for one, you divide by five.

So your shares would now be $2 each.

Companies that do reverse splits, their stock price tends to go down.

Let me see.