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C is considering ofr reverse split, is is good or bad for its stock. Let us see what people think about reversed stock:
Since it's done for purely cosmetic reasons and doesn't change a company's finances, the market knows it and the company gets penalized. Most companies end up seeing their stock prices continue to slide," said Pamela Peterson, a finance professor at Florida State University and co-author of a 1992 research report, "A further understanding of stock distribution: The case of reverse stock splits."
Jon Johnson, editor of Texas-based newsletter StockSplits.net, agreed.
"Reverse splits have a negative stigma. A lot of investors we talk to don't have a lot of confidence in a company that gets its stock up through a reverse split. They think the company is playing games and trying to get credit for something they don't deserve," Johnson said.
"My impression is reverse splits are a strategy of last resort," said Neal Macneale, editor of the 2-for-1 Stock Split newsletter in Menlo Park, Calif. |
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