anonymous
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anonymous
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Disadvantages of Reverse Stock Split
The most significant downside of a reverse stock split is that it diminishes share liquidity in the market, and because illiquid shares are rarely traded, proper price discovery of the stock price may be hampered.
When it comes to reverse stock splits, small shareholders are left with even fewer shares and occasionally receive cash since their shares are insufficient, resulting in stock accumulation by big players at the expense of small shareholders.
Reverse stock splits are seen unfavorably by the markets because they may indicate weakness or inept CEOs who fail to deliver shareholder value.
The most significant downside of a reverse stock split is that it diminishes share liquidity in the market, and because illiquid shares are rarely traded, proper price discovery of the stock price may be hampered.
When it comes to reverse stock splits, small shareholders are left with even fewer shares and occasionally receive cash since their shares are insufficient, resulting in stock accumulation by big players at the expense of small shareholders.
Reverse stock splits are seen unfavorably by the markets because they may indicate weakness or inept CEOs who fail to deliver shareholder value.