4 ms·

Investors aren't stupid and realize a company doing a reverse split just to maintain the minimum share price is doomed. See also: $HMNY.

gammateam 8y ago
then thats what the article should be about, not an arbitrary share price metric
- wgerard 8y ago
  It's not arbitrary at all (well, I suppose the listing requirements are arbitrary), as I've noted elsewhere: > You'll get delisted from the NYSE if you fall below $1/share or below a certain market cap for more than 30 consecutive trading days. It's actually a pretty big deal for Blue Apron.
  - gammateam 8y ago
    Then reverse split and magically have higher value shares wow we've come full circle from my parent comment
    - wgerard 8y ago
      I'm not sure what your argument is here, it seems like you don't think reverse splits have any implications or consequences for the company. You can't casually do a reverse split just to avoid being delisted. You're telling investors "we have no idea how to change direction so we're just gonna kick the can down the road for a bit". It's a really big deal, and if Blue Apron survives into 2020 it's very unlikely it will look anything like it does today. Passing below the $1/share marker is a forcing function (i.e. it's not arbitrary at all) for the company to make significant adjustments, as opposed to the plethora of companies that trade in the $1-$10 range who can continue plodding along. BI's audience is one that's mostly aware of this fact, so that's why the article is about that "arbitrary" price marker - it's a sign of major changes incoming rapidly. So, I guess I'm not really sure what your point is. "Just do a reverse split" is like saying "just declare bankruptcy" or "just charge more money" in that it glosses over the consequences of those actions greatly.
      - gammateam 8y ago
        > You can't casually do a reverse split just to avoid being delisted. Narrator: You can. The point that it is a valid option and your point is that it has consequences. Not mutually exclusive. Being punted to the Bulletin Boards or Pink Sheets has worse consequences for some of the investors who literally can't hold it anymore, thats a greater consequence than their opinion on a reverse split.
        wgerard 8y ago
        It seems like you're more interested in being correct than having a discussion, so I'll leave you to it.
- simias 8y ago
  It's a symbolic milestone, that's it. If a company's stock keeps plunging eventually you have to decide that it's time to talk about it, having it cross the $1 threshold seems like a decent time. It gives an excuse to make an article and recap the events that lead to this situation. As someone who didn't follow this story closely it's useful to have this bit of context.
  - wgerard 8y ago
    > It's a symbolic milestone It's actually not symbolic at all, it's a very real (negative) milestone that has ramifications for the company.
smallgovt 8y ago
HMNY isn't a great comparison. HMNY didn't really tank because they did a reverse split. They primarily tanked because they continued to dilute investors after their reverse split by issuing new shares and selling them to the public markets via their ATM offering. Reverse splits cause further depression in share price, but pretty much any example other than HMNY would be better. i.e. Price dropping by 1000x after a split is not typical at all.

gammateam 8y ago

then thats what the article should be about, not an arbitrary share price metric

wgerard 8y ago
It's not arbitrary at all (well, I suppose the listing requirements are arbitrary), as I've noted elsewhere: > You'll get delisted from the NYSE if you fall below $1/share or below a certain market cap for more than 30 consecutive trading days. It's actually a pretty big deal for Blue Apron.
- gammateam 8y ago
  Then reverse split and magically have higher value shares wow we've come full circle from my parent comment
  - wgerard 8y ago
    I'm not sure what your argument is here, it seems like you don't think reverse splits have any implications or consequences for the company. You can't casually do a reverse split just to avoid being delisted. You're telling investors "we have no idea how to change direction so we're just gonna kick the can down the road for a bit". It's a really big deal, and if Blue Apron survives into 2020 it's very unlikely it will look anything like it does today. Passing below the $1/share marker is a forcing function (i.e. it's not arbitrary at all) for the company to make significant adjustments, as opposed to the plethora of companies that trade in the $1-$10 range who can continue plodding along. BI's audience is one that's mostly aware of this fact, so that's why the article is about that "arbitrary" price marker - it's a sign of major changes incoming rapidly. So, I guess I'm not really sure what your point is. "Just do a reverse split" is like saying "just declare bankruptcy" or "just charge more money" in that it glosses over the consequences of those actions greatly.
    - gammateam 8y ago
      > You can't casually do a reverse split just to avoid being delisted. Narrator: You can. The point that it is a valid option and your point is that it has consequences. Not mutually exclusive. Being punted to the Bulletin Boards or Pink Sheets has worse consequences for some of the investors who literally can't hold it anymore, thats a greater consequence than their opinion on a reverse split.
      - wgerard 8y ago
        It seems like you're more interested in being correct than having a discussion, so I'll leave you to it.
simias 8y ago
It's a symbolic milestone, that's it. If a company's stock keeps plunging eventually you have to decide that it's time to talk about it, having it cross the $1 threshold seems like a decent time. It gives an excuse to make an article and recap the events that lead to this situation. As someone who didn't follow this story closely it's useful to have this bit of context.
- wgerard 8y ago
  > It's a symbolic milestone It's actually not symbolic at all, it's a very real (negative) milestone that has ramifications for the company.

smallgovt 8y ago

HMNY isn't a great comparison. HMNY didn't really tank because they did a reverse split. They primarily tanked because they continued to dilute investors after their reverse split by issuing new shares and selling them to the public markets via their ATM offering. Reverse splits cause further depression in share price, but pretty much any example other than HMNY would be better. i.e. Price dropping by 1000x after a split is not typical at all.