"It is simply a type of window dressing where the company miraculously ends up with one tenth as many shares on issue and then people stop complaining that there are too many shares on issue."
A reduction in the number of shares isn't the only reason. Some/many companies that decide on a consolidation do so to make the share price look better and more 'investment worthy'. For example, SBM had been trading in the 30-40 cent range for years and they carried out a consolidation of, I think 6 for 1 taking their shares up to the $2.50 range (sorry, I can't recall the precise details but you get the idea) which made it look like a much bigger / more important company for brokers to recommend to their clients. Ironically, in the gold slide of 2013, it went from $2.30 to $0.22. It's at 0.38 now and is back as one of my favourite stock for ST trading.
Cheers, GW
Add to My Watchlist
What is My Watchlist?
