Thats the theory, the reality is consolidations always end up worse for shareholders.
Every single time there's a consolidation, you can bet the stock will be cheaper immediately after. Let’s say OSL does this 400-for-1 consolidation. The stock’s trading at 0.004 now, and after the consolidation, it should be priced around $1.6 to keep the same market cap. But—and here’s the kicker—you can absolutely count on the fact that you’ll be able to pick it up under $1.60 post-consolidation. This happens every single time. Thousands of examples exist , consolidations that lead to lower prices straight afterward. In fact, I challenge anyone to show me even one example where a consolidation doesn’t result in a dip. You’ll be hard-pressed to find one, but the market is littered with failures.
Take a look at some recent examples: WSI, ZLD, MOM, MDC, NUH, Ci1, TPD, MGT, THR, Ti1, KDY, MXC, GDA, TOE, RR1, ADX, WNX, FGL, PEN and to keep it in the biotech space IVX, all of them hit new all-time lows post-consolidation. And it’s not just small companies PDN, a multi-billion-dollar uranium player, did it last year and is still trading lower post-consolidation, even as uranium saw a bullish run.
For me, consolidations are a red flag. Whenever a company announces a consolidation, I get out. I buy back in cheaper after the consolidation. It’s a strategy that’s worked every time, I’ve yet to see one where it hasn’t. Which is probably why there was a huge dump yesterday.
Only positive of a consolidation is to cosmentically raise the share price (market cap stays the same or drops) then it gives management to do more cap raises and dilute shareholders into oblivion as they raise all the way back to these levels again for another 5 years.
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