"From my limited and past experience, it seems more likely that a "penny dreadful" stock (@ .26c in this case) with very good potential such as BOE, has a greater chance for an exponential rise in its share price ie: 10 fold increase"
again please look at the question below & try to answer it, in particular "which has the best chance of doubling?" (I know you understand the answer to the first question already)
"$1B = $1.00 * 1B shares on issue; $1B = $0.01 * 100B shares on issue; $1B = $100 * 10M shares on issue; Of the three companies above, each valued at $1B but with a different number of shares on issue (and therefore different share prices), which do you think is the most valuable? Which has the best chance of doubling, or halving? Which has the worst value?"
According to your quote above, you seem to think the second company has higher volatility / a higher chance of being capable of doubling its market cap (and share price) than the first company, in that list, but as you say, this opinion is based on your past experience - i.e. you are drawing a correlation, empirically, without understanding why the correlation might exist.
The answer is that stocks with a low market cap *tend* to have a low market cap because they are pricing in a lot of uncertainty/risk, i.e. "the drilling has a 90% chance to find nothing and a 10% chance to find a billion dollar resource, so the company is worth about $100M, but could soon run 10x". Independently of this, low mkt cap companies with a lot of uncertainty *TEND* to have low share prices too, partly just from being worth less, but also due to frequently doing cap raises and diluting to end up with more shares. The result is that lower share price *correlates* with companies suitable for degenerate gambling 10x-or-nothing plays, but doesn't actually have any effect on whether they are, hence the bank examples in my other posts.
Extreme examples: consolidating BOE shares 100,000-to-1 so the stock (per share) costs as much as Berkshire Hathaway would not magically make it into a stable blue chip stock, meanwhile Berkshire Hathaway doing a 2,000,000-to-1 share split to make its shares cost 20c would not suddenly allow it to run 10x.
Bringing it back to the current situation: the BOE reverse share split should have negligible effect on your belief in the stock's ability to run 10x from here. If you were 5% sure it would happen before, you should be quite close to 5% sure of it now. If you were 90% sure it would happen before, you should be quite close to 90% sure of it now. It's not a material change and if you are adjusting your expected outcomes because of it, your expected outcomes are now based on random noise
Expand
(20min delay)