Re: Reverse Split, the good, bad and in between....
in response to
by
posted on
Aug 13, 2018 11:01PM
Profits....do you mean profit from selling your shares? Or profits from the business reporting side of things.
Either way, let's break it down. Because I'm a simple guy I'll keep the numbers simple. We'll say that at the time of a 1:2 share consolidation, meaning for each two shares a share holder owns pre-consolidation he'll have one post consolidation share. We'll say that at the time of reverse the OS count is 200 million and the VWAP the reverse is calculated at is $4.
In this scenario a shareholder with 10,000 pre-consolidation shares priced at $4, he would have 5,000 shares post consolidation at a PPS of $8. 10,000x$4=$40,000 pre-split, 5,000x$8=$40,000 post split.
The 200 million pre-consolidation outstanding shares would be reduced to 100 million.
Now...in 2019 Resverlogix reports revenue of $300 million (pulled straight out of a place where the sun never shines) and realizes a profit of $200 million after expenses....all numbers from the same place.
$300 million in revenue brings Revenue Per Share in at $3 RPS. $200 million in +earnings (profits) brings Earnings Per Share in at $2 EPS. Had the split not taken place instead of RPS of $3 it would have been $1.50 and EPS would have been $1. The totals don't change, only the ratios.
Clear as mud?