If the value of a stock collapses to pennies a share, investors may think it is headed for zero. To bring its share price back up to more-respectable levels, the company may move in the opposite direction of share splits and decide to declare a reverse split: five, 10 or more “old” shares will then turn into one “new” share. This “reverse split” is also called a “share consolidation.” It’s what usually happens to penny mining companies that have spent all their money without finding any valuable mineral deposits.After a reverse split, stock prices often fall back down again. Some investors sell because the stock seems more expensive than it was, even though a given holding represents the same percentage ownership of the company. Others sell because they fear the company will raise money by selling new shares, and this will drive down its stock price.
MYX Price at posting:
27.5¢ Sentiment: Hold Disclosure: Held
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