Securities lawyers say the practice is relatively common for firms whose stock falls into the sub-dollar range. However, it's not seen as a great image-booster. Yoon's comment was rather prescient in Musicmaker's case. On Thursday afternoon, two weeks after first announcing the reverse split, Musicmaker said it is cutting nearly a third of its staff in a restructuring plan the company promised would help reduce its cash-burn rate. The stock closed at 56 cents.
Shareholders still perceive it as the company's taken away something.
The reaction is the direct opposite of what happens in a standard stock split. In a regular, or forward split, a company exchanges each single share for two or more shares worth a fraction of the value. Although they're not getting more money, investors tend to see forward splits as a sign that a stock is moving upward. Send it . Use this version.