Is a reverse split coming?

Posts: 5 · New Forum Member Joined: Jul 23, 2004 Posts: 5

I predict it will happen before the price drops below 10.

Posts: 72 · Full Forum Member Joined: Mar 21, 2006 Posts: 72

Why? The danger area for NYSE stocks is <$1, not <$10.

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

How about a $6 per share dividend Very Happy

Posts: 14 · Vonage Forum Associate Joined: May 23, 2006 Posts: 14

Tazzo wrote:

I predict it will happen before the price drops below 10.

Is it just me or is the forum getting really quiet now as Vonage continues to fall? Looks like we might hit 10 very soon. I don't think we are looking at a reverse split anytime soon.

When will it stop falling?????

Posts: 476 · Posted: Thu Jun 15, 2006 11:04 am Post subject: Re: Is a reverse split coming?

Tazzo wrote:

I predict it will happen before the price drops below 10.

$9.83 as I look at it right now. So much for that prediction...

Posts: 1123 · Vonage Forum **MVM** Joined: May 26, 2005 Posts: 1123

Please indulge me, oh masters of the market, cause I'm an idiot. What's a reverse split?

Posts: 476 · Posted: Thu Jun 15, 2006 11:11 am Post subject:

navydavy2001 wrote:

Please indulge me, oh masters of the market, cause I'm an idiot. What's a reverse split?

I am hardly a master of the market, but I think I can explain a reverse split.

In a normal stock split, all shareholders of record get a certain amount of shares for each 1 they currently own. Say 2 shares for each 1, or 3 shares for each 1. So, you end up with a lower valued stock, but you maintain the same amount of investment because you now have more of that stock.

In a reverse stock split, all shareholders of record get 1 share for a certain amount of shares they currently own. Say 1 share for each 2 you own, or 1 share for each 3 you own. The effect is that it drives the price of the stock up, but again you maintain the same amount of investment because you now have less of that stock.

Posts: 1123 · Vonage Forum **MVM** Joined: May 26, 2005 Posts: 1123

Cool, I understand that as you explain it. So how does a split or reserve split get initiated? By the Company or by the market?

Posts: 72 · Full Forum Member Joined: Mar 21, 2006 Posts: 72

blakadher wrote:

navydavy2001 wrote:

Please indulge me, oh masters of the market, cause I'm an idiot. What's a reverse split?

I am hardly a master of the market, but I think I can explain a reverse split.

In a normal stock split, all shareholders of record get a certain amount of shares for each 1 they currently own. Say 2 shares for each 1, or 3 shares for each 1. So, you end up with a lower valued stock, but you maintain the same amount of investment because you now have more of that stock.

In a reverse stock split, all shareholders of record get 1 share for a certain amount of shares they currently own. Say 1 share for each 2 you own, or 1 share for each 3 you own. The effect is that it drives the price of the stock up, but again you maintain the same amount of investment because you now have less of that stock.

That's pretty much it, but the important thing is the reasoning behind the actions, and theire perception.

A normal split is usually done when a company's share price climbs rapidly, and improves liquidity of the stock by keeping shares at an affordable and useful level. You can compare it to the situation of having a wallet stuffed full of $100 bills. You may have problems spending the money because people don't like taking such large denominations. However, if you change your money to five times the number of $20 notes, you still have the same amount, but is is easier to use. Since this sort of split is associated with a soaring price then it is perceived in a good light.

A reverse split is done to keep a company's share price above a minimum number. A typical threshold is $1, because both the NYSE and NASDAQ will initiate delisting of a company whose stock closes below $1 for 30 consecutive days. Since reverse splits are associated with major drops in share price, they are seen in a very negative light. The mere fact that a company has executed a reverse split will frighten off many investors.

Posts: 1123 · Vonage Forum **MVM** Joined: May 26, 2005 Posts: 1123

Ok, got it. I tell ya, I've learned a LOT about investing over the past three weeks. I even started watching Mad Money on CNBC, that guy is a nutcase! :lol: