الثلاثاء، 9 يوليو 2024

When Stock Splits Go Bad

(the downside of reverse stock splits)
 
   
     
   
 
JULY 9, 2024
   
PROSPERITY PUB MARKET TALK
When Stock Splits Go Bad
 

With some high-profile stock splits happening this year — including AVGO's upcoming 10-for-1 split, we sat down with Jack Carter to talk stock splits... and he gave us some interesting info.

One of the most critical points Jack emphasized was the distinction between regular stock splits and reverse stock splits.

While regular splits can be a positive sign for a company’s stock, making shares of a stock that is rising in price  more accessible to a broader range of investors, reverse splits often signal trouble.

A reverse stock split usually happens when a company’s stock has gone down in price enough to turn it into a penny stock — or close to it. By doing a reverse stock split, a company reduces the number of its outstanding shares and increases the stock price proportionally.

For example, in a 1-for-10 reverse split, every ten shares of a company are consolidated into one share, and the price of each share is multiplied by ten.

Companies usually do this to keep a stock from being delisted from an exchange, such as the Nasdaq, where there are minimum price requirements.

Why Reverse Splits Are Often a Red Flag

Jack pointed out that reverse splits are generally a desperation move, a last-ditch effort to maintain listing requirements.

"I can't remember a situation where I’ve seen a stock do a reverse split and it went on to become a good stock," Jack tells us.

Companies that resort to reverse splits often face underlying financial issues that a simple stock price adjustment can’t fix.

He warned that while the reverse split might temporarily prop up the stock price, it doesn’t solve the fundamental problems the company has.

Another myth Jack dispelled is the notion that reverse splits make stocks more attractive by increasing their price. While the stock price might appear more respectable after a split, he reiterated that the underlying issues remain.

The company's market cap doesn’t change, and the move often signals to savvy investors that the company is in distress.

Jack told us that every stock he trades starts with a bullish trend. Regardless of positive news, great products, large cash reserves or anything else — if a stock is not in a long-term bullish trend, he will not trade it.


Looking Ahead

As we look forward to AVGO’s 10-for-1 stock split this coming week, Jack is quick to point out that this is a stock split worth your attention.

With a pre-split share price over $1700, as well as a long term bullish trend and a leading position as a chipmaker supplying the AI ecosystem, the stock checks all the right boxes.



— The Prosperity Pub Team
 
Avoid This Common Stock Split Mistake!

Every time a stock split is announced, Jack Carter sees traders get all excited…

And the very next thing they do is make ONE common mistake!

But after nearly 40 years in the markets, Jack’s got the art of the stock split down to a science… 


And he wants to help you avoid making THIS common mistake!
SCOTT WELSH’S TICKER TALES
Second Time’s The Charm? (MS)
 

Banks have been up and down quite a bit over the past several months.

But right now, it looks like banks are looking bullish again.

And, specifically, Morgan Stanley (MS) looks like it might be ready to break out.

The last time MS reached this level, it teased a move and then pulled back. 

Now it’s coming up to that level once again.

Here’s the chart:

 
 

A break above $103.25 could lead to an explosive move.

Sometimes the second time is the one.

We’ll keep an eye on it.


Happy trading,
— Scott Welsh

P.S. As a reminder, these plays are based on my longer-term Weinstein Stage Analysis method. The charts above use weekly candles and a 30 week simple moving average. For details on this method, see my explanation on this Ask The Pros episode starting at timestamp 20:45.
   
 

Legendary Trader: “Panic Set to Begin on August 1st”

Legendary Trader: "Panic Set to Begin on August 1st"

According to legendary trader Tom Gentile, we're about to see the biggest panic since the dot-com crash.

Tom saw the rise of Bitcoin in 2013…

He predicted the Covid crash of 2020... and after the crash, he picked Google, Apple, and Tesla before they soared 188%, 236%, and 1,181%.

He also predicted the rise of Nvidia back in 2019, when he gave his readers a chance to turn $10k into more than $320,000.

that's why you must see his critical AI warning for August 1st.

Watch Here.

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This CEO sold his first company to Microsoft.

Now he's quietly building a new AI company that the tech giant is already eyeing.

Microsoft did their due diligence...and they say this AI company's tech is meeting even their incredibly high bar. [ad]

Find out who Microsoft has now vetted.
Boost Your Trading Game: Small Account, Big Gains Strategy!

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Could Buying This Growth Stock At $5 Be Like Investing In Nvidia In 2010?

Trying to spot the next Nvidia-like growth stock is no easy feat. These firms are often operating in emerging industries that many people think are overhyped or unrealistic.









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TSLA flashing BUY & it's outperforming 99.4% of the market

American Wealth Investing

IS TSLA A BUY?


Dear reader,

They say people lie, but numbers don't…

So, let's talk numbers…

Year to date, TSLA is up over 100%...

It's outperforming 99.4% of all S&P 500 stocks…

And 1,500 institutions have added to their Tesla positions…

A handful of them expect TSLA to reach nearly $600 by the end of 2025…

That's upwards of 100% from today's price.

So yeah…

It's not a bad idea to go long.

But I think there's a better opportunity hidden inside shares of TSLA right now.
(This link above and those below will opt in you in to receive emails from The TradingPub and its partners. Unsubscribing is easy. Privacy policy)

A way for folks like us to target gains of 100% or more…in six days or less.

And best of all, this opportunity is opening this week.

Granted, I cannot guarantee future returns or against losses, but…

If you want the details just go here and you'll see everything.

Sincerely,
Lance Ippolito

The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. The trades expressed are from historical data in order to demonstrate the potential of the system. 

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