Now Wait a Minute, Aren’t Stocks That do Reverse Splits Supposed go Down and Stay Down?
First our client LQR House (LQR) goes from $1.00 to $4.00 in a month, and then Polished (POL) goes from $1.00 to $9.00 – up 800% in a week!
Is there a new investing strategy developing right in front of our own eyes?
If you think about, if a decent company does a major reverse and obliterates the float, shouldn’t the assumption be that it could potentially skyrocket higher, with any amount of significant news?
Our previous assumption WAS if someone owned 100,000 shares of a $0.30 stock, they had a dream they could make $70,000 if the stock went to $1.00, which happens often enough. But if the company reverses 1:10 to $3.00 the investor suddenly realizes the stock would have to go from $3.00 to $10 to make $70,000, which does not happen often enough.
So they indiscriminately sell, and since there is no float – selling 10,000 shares knocks it to $2.75, then another 10,000 takes it to $2.25 and so on until it’s back to $0.30. We’ve all seen that movie. That’s just how it works, right?
Well, not so fast. Maybe not!
We’re studying the strategy.
Disclaimer, investing post-reverse is highly risky, so you’d better bring your ‘A’ game. Reverse’s are reserved for traders who stare at the screen all day, or for optimistic long-term traders taking advantage of the short-term traders, who do CONSIDERABLE research as to whether is actually decent or not.
