This is not a gymnastics move – no impossible physical contortions required. It is something iConsumer is in the early stages of considering. It would make each share of stock more valuable, without actually changing the value of the entire company.
The goal would be to remove the label “penny stock” from our shares. Reverse splits don’t change the economics of iConsumer at all, but it may change perception amongst investors and more importantly, in the brokerage community. The latter would hopefully make it easier for shareholders to deposit their stock into a brokerage account.
When a company splits its stock, it ends up with more shares, each at a lower price. When a company reverse splits it stock, it ends up with fewer shares, each at a higher price (immediately after the reverse split). After that, the price can change up or down, depending on the market’s whims.
For instance, if we did a 1 for 10 reverse split, if today you own 100 shares, you’d own 10 shares after a reverse split. If those 100 shares were worth $10 pre-split, the 10 shares would be worth $10 post split. You’d still own the same percentage of iConsumer that you own today. If 100 shares represented ownership of 5% of iConsumer before the reverse split, 10 shares would represent 5% of iConsumer after the reverse split.
If we did a 1 for 100 reverse split, and you had started by owning 100 shares, you’d end up owning 1 share (but again, you’d own the same percentage of iConsumer as before the split).
We’re gathering information now. Here’s an article we came across that is well-written and right on point.