Will IMU be removed from the ASX200 in June?, page-80

Would be interested in which stocks these are, if you care to share. There is often a pattern of this happening, but it’s not the fault of the consolidation. It’s because stocks that do consolidations often have shared characteristics that determine their eventual fate, i.e.

1) unprofitable (hence a ballooning share register, they need to keep raising money to keep afloat / continuing paying fat salaries to directors)

2) lack of discipline from the management (as above, multi-billions of shares on issue tell you they have a history of raising, i.e. none of their previous business strategies have delivered earnings)

3) a retail-heavy register (institutions simply won’t put up with constant dilution)

4) poor business performance = poor share price performance, which means consolidation becomes a requirement for a last-ditch raise (if you’re trading at fractions of a cent you can’t raise any lower, so without a discount nobody will throw money at you).

If you want a specific example of all of the above, look no further than once-popular DW8. They tick all of the boxes and have now gone bust. The share consolidation was the last step, not the cause. Cheers