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Why do you think there'd be a reverse stock split? The price has been going up, not down. Or you think it would happen to get around the shareholder limit pre-I

Why do you think there'd be a reverse stock split? The price has been going up, not down. Or you think it would happen to get around the shareholder limit pre-IPO?

msoad 11y ago
Yes, to make the numbers work for each round they usually split the stocks.
- erichurkman 11y ago
  This is far less common than you would think. The vast majority of rounds are raised by the company's board and shareholders approving additional stock to be issued.
mrgordon 11y ago
I would expect them to simply issue additional shares.
erichurkman 11y ago
Stock splits do not change ownership or value. If you own 10 shares pre-split valued at $1 per share, and you have a split 10-for-1, you now own 100 shares worth $0.10 per share. In general, companies do reverse splits prior to an IPO to push up the share price. It's seen favorably to have a $50.00 IPO price per share vs $5.00 even though the overall value is the same – the headlines read better that your IPO debuted at $50 but increased to $60 vs an increase of $5 to $6.
- mrgordon 11y ago
  According to Wikipedia, reverse stock splits remove everyone with less than the split factor from the cap table. So if it was a 10-to-1 reverse split then you'd need at least 10 shares or you'd get paid out in cash https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-3 https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-...
  - erichurkman 11y ago
    If you have 10 shares or 1 share in a company with tens or hundreds of millions of shares on the cap table, your stake effectively doesn't exist, so getting a cash payout is probably in your favor.
    - mrgordon 11y ago
      Right thats why I didn't understand why the original comment thought a reverse stock split is in the cards
- msoad 11y ago
  But you have options for number of shares to buy and when you get the options you have no idea how much each share after the IPO would be so you make a wild guess and evaluate your offer. What happens after reverse split is, number of options you have decreases and the prices of each share after IPO is still the same or around your guess. That's how you lose money with a reverse split. I know. It's all because options have no value and people try to evaluate them but still...
  - stouset 11y ago
    In a split, your options split as well.

Why do you think there'd be a reverse stock split? The price has been going up, not down. Or you think it would happen to get around the shareholder limit pre-IPO?

msoad 11y ago

Yes, to make the numbers work for each round they usually split the stocks.

erichurkman 11y ago
This is far less common than you would think. The vast majority of rounds are raised by the company's board and shareholders approving additional stock to be issued.

mrgordon 11y ago

I would expect them to simply issue additional shares.

erichurkman 11y ago

Stock splits do not change ownership or value. If you own 10 shares pre-split valued at $1 per share, and you have a split 10-for-1, you now own 100 shares worth $0.10 per share. In general, companies do reverse splits prior to an IPO to push up the share price. It's seen favorably to have a $50.00 IPO price per share vs $5.00 even though the overall value is the same – the headlines read better that your IPO debuted at $50 but increased to $60 vs an increase of $5 to $6.

mrgordon 11y ago
According to Wikipedia, reverse stock splits remove everyone with less than the split factor from the cap table. So if it was a 10-to-1 reverse split then you'd need at least 10 shares or you'd get paid out in cash https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-3 https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-...
- erichurkman 11y ago
  If you have 10 shares or 1 share in a company with tens or hundreds of millions of shares on the cap table, your stake effectively doesn't exist, so getting a cash payout is probably in your favor.
  - mrgordon 11y ago
    Right thats why I didn't understand why the original comment thought a reverse stock split is in the cards
msoad 11y ago
But you have options for number of shares to buy and when you get the options you have no idea how much each share after the IPO would be so you make a wild guess and evaluate your offer. What happens after reverse split is, number of options you have decreases and the prices of each share after IPO is still the same or around your guess. That's how you lose money with a reverse split. I know. It's all because options have no value and people try to evaluate them but still...
- stouset 11y ago
  In a split, your options split as well.