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I agree with your observation that share consolidations...

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tinhat

5,668 Posts.

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30/08/21

11:54

Post #: 55677100
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Originally posted by Nanday: ↑

For relisting, big exchanges have requirements. For instance the NASDAQ has these listed: What are the rules to be listed on NASDAQ?Shareholders Equity of at least $2,000,000.At least 100,000 shares of public float.A minimum of 300+ shareholders.Total assets of $4,000,000.At least two market makers.$3 minimum bid price of the company stock.Public float market value of $1,000,000.

The one that stands out for me is the minimum bid price. Animoca is not there yet, in order to get there, it can happen two ways, the stock price advances on its own, or they do a consolidation. I hate consolidations, I have been in a few, lost money every time. Unfortunately a lot of companies that do them are in some kind of trouble, they have pretty much exhausted the patience of their existing shareholders to do a capital raising and have to go to to other investment means to raise more money, and that means the requirement to product a higher share price, so they decide to do a 10 for 1 for example. Shareholders are left with 1/10th of what they had, in theory the share price should then be 10X higher, but I've never seen that happen. Not to say it couldn't in the case of Animoca which is on a strong trajectory.

But still, I'm hoping that the strategy is to wait until the share price meets the minimum bid requirement on its own. The other thing I've seen happen is that smaller shareholders get shafted in a consolidation, if they have too few shares (set by the company), the company will do a buyout of them, of course at the now much lower price because it never achieved the 10X target. Again, it all depends on how strongly Animoca's share price grows on its own, hopefully we can avoid a consolidation.

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I agree with your observation that share consolidations generally destroy shareholder value. VTI fit the bill. This is more because a share consolidation is a symptom of bigger problems as you outline. There are exceptions though. KZA had to do one a few years ago because the NASDAQ listed depository interests fell below the minimum price NASDAQ require to maintain a listing. I can't remember at what price the 10:1 consolidation was done but KZA has probably tripled in price since then. A consolidation is not the cause, it's the effect.

AB1 Price at posting: 18.0¢ Sentiment: None Disclosure: Held
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I agree with your observation that share consolidations...

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