After a reverse split 1-5 will the stock price track at a x 5 pace compared to before the split?

[wxytrader]

Basically what I am wondering is, if the abc stock is trading at $2, and the 52 week high of the abc stock was $15, then if abc stock returns to its previous high, my scenario would look like this prior to any reverse split:

10,000 shares @ $2 = 10,000* ($15 - $2) = $13 profit per share or total profit of 10,000 * $13 = $130,000.


After the 1-5 reverse split would my scenario look like this?

2000 shares @ $10 = 2000* ($15-$10) = $5 profit per share or total profit of 2000 * $5 = $10,000.


Or would it look like this because the price will now track at x 5 what it tracked prior to the 1-5 reverse split?

2000 shares @ $10 = 2000* ($75-$10) = $65 profit per share or total profit of 2000 * $65 = $130,000

 

[BKR88]

Basically what I am wondering is, if the abc stock is trading at $2, and the 52 week high of the abc stock was $15, then if abc stock returns to its previous high, my scenario would look like this prior to any reverse split:

10,000 shares @ $2 = 10,000* ($15 - $2) = $13 profit per share or total profit of 10,000 * $13 = $130,000.


After the 1-5 reverse split would my scenario look like this?

2000 shares @ $10 = 2000* ($15-$10) = $5 profit per share or total profit of 2000 * $5 = $10,000.


Or would it look like this because the price will now track at x 5 what it tracked prior to the 1-5 reverse split?

2000 shares @ $10 = 2000* ($75-$10) = $65 profit per share or total profit of 2000 * $65 = $130,000

$10,000 profit if the new stock rises from 10 to 15 after the split.
The stock historical data needs to be adjusted also so the 52 week high for the new stock will be 75 (15x5).

 

[wxytrader]

$10,000 profit if the new stock rises from 10 to 15 after the split.
The stock historical data needs to be adjusted also so the 52 week high for the new stock will be 75 (15x5).

Yes if it literally rises from $10-$15.

Let's say that the abc stock had a 52 week low of $3, and a 52 week high of $15, before the split.

Then after the split, the price ends up at $15 after a few months.

Then the stock rallys due to the same market forces from when it last rallied from $3 to $15, only now it will rally from $15 to $75?

It should right? There are 1-5 less shares outstanding so price action should be at 5 x the previous force of the market.

 

[Overnight]

Yes if it literally rises from $10-$15.

Let's say that the abc stock had a 52 week low of $3, and a 52 week high of $15, before the split.

Then after the split, the price ends up at $15 after a few months.

Then the stock rallys due to the same market forces from when it last rallied from $3 to $15, only now it will rally from $15 to $75?

It should right? There are 1-5 less shares outstanding so price action should be at 5 x the previous force of the market.

Try this. (You are thinking too hard about it.)

https://www.investors.com/how-to-in...-amazon-stock-splits-benefit-or-hurt-a-stock/

 

[wxytrader]

Try this. (You are thinking too hard about it.)

https://www.investors.com/how-to-in...-amazon-stock-splits-benefit-or-hurt-a-stock/

I understand what a reverse split is. I know it reduces outstanding shares but does not affect market cap. My question is the affect it will have on post split price movement.

Will the same market conditions that propelled the pre split stock to it's 52 week high of $15, now propel the price to $75 post split since that would be the adjusted post split 52 week high? If you read my examples you will see why it matters and how it will affect potential profits.

 

[Overnight]

That's not what I'm asking. I get what a reverse split is, but my question is the affect it will have on post split price movement.

Will the same market conditions that propelled the pre split stock to it's 52 week high of $15, now propel the price to $75 post split since that would be the adjusted post split 52 week high? In other words, will I make the same profits regardless of the split?

Oh, I see what you are asking. Hmm, that is a tough one for me, since I do not trade stocks individually. On paper, the answer should be no, the PA should be the same, since adjusted-split price does not matter based on funnymentals. But there is the psychology of the actual stock price that may come into play I reckon? Out of my league. @stonedinvestor @vanzandt Yer needed here, because I am sure you guys have seen what happens to price behaviour post-split in all those companies you follow.

 

[BKR88]

Then the stock rallys due to the same market forces from when it last rallied from $3 to $15, only now it will rally from $15 to $75?

Yes, it can rise from 15 to 75 just the same as going from 3 to 15. The valuations will all be the same. After the split just ignore the previous numbers & look at the current price-adjusted chart. Technicals & fundamentals will be the same as pre-split.

 

[wxytrader]

Yes, it can rise from 15 to 75 just the same as going from 3 to 15. The valuations will all be the same. After the split just ignore the previous numbers & look at the current price-adjusted chart. Technicals & fundamentals will be the same as pre-split.

Ok I think we are all on the same page. I probably used a bad example so just to be clear, if stock abc was an etf that tracked gold, and when gold reached its 52 week high of $2043.3, stock abc reached its 52 week high of $15. So after the 1-5 reverse split I can trade based on a price target of $75 if gold reaches $2043.30 again?

 

[vanzandt]

Yes if it literally rises from $10-$15.

Let's say that the abc stock had a 52 week low of $3, and a 52 week high of $15, before the split.

Then after the split, the price ends up at $15 after a few months.

Then the stock rallys due to the same market forces from when it last rallied from $3 to $15, only now it will rally from $15 to $75?

It should right? There are 1-5 less shares outstanding so price action should be at 5 x the previous force of the market.

Usually companies institute reverse splits to avoid an exchange de-listing, and that's usually not a good sign.

Not sure what stock you're referring to, but I highly doubt it'll see the pre - 1:5 price anytime soon. If ever.

I'd dump it if I were you.

 

[Overnight]

Usually companies institute reverse splits to avoid an exchange de-listing, and that's usually not a good sign.

Not sure what stock you're referring to, but I highly doubt it'll see the pre - 1:5 price anytime soon. If ever.

I'd dump it if I were you.

Inherently, a reverse split is a bad sign. I went through one in the 90s, and it sucked. I thought it would be a great thing on my ECGI ticker, because my 1000 shares became 100. 10:1 reversal. The $200 position eventually fell to 40 bux or whatever. Get the hell out of a company doing reverse splits, man. You live longer!