RE: YouTube9 Nov 2025 18:56
From chatgpt: «A reverse stock split is generally perceived negatively by the market, as it can be a sign of a struggling company. While it artificially boosts a stock's price in the short term to meet exchange requirements or improve image, it doesn't add value and can lead to decreased liquidity and investor confidence. Whether it is good or bad ultimately depends on the company's future performance.»
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So why do it?
WSBn explains: «Purpose of the Capital Reorganisation
-The Company’s issued ordinary share capital currently consists of 3,022,586,460 Existing Ordinary Shares. As
a result of the number of shares in issue, which is significantly higher than many companies whose shares are
traded on AIM and AQSE, the Board believes that the low share price affects investor perception of the Company and share price volatility. Further, as a Gibraltar incorporated public company the Company is unable to issue shares for less than the nominal value of its Ordinary Shares. Accordingly, the objective of the Capital Reorganisation is to reduce the number of Existing Ordinary Shares to a level which is more in line with other comparable AIM-traded companies with the intention of also creating
a higher share price per ordinary share in the capital of the Company. The Directors believe that the Capital
Reorganisation should improve the liquidity and marketability of the Ordinary Shares.»
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My view: I can only consider what WSBN explained. With the current share price of 1p being 10x the current nominal value of 0.1p I am at a loss to understand this reverse split proposed by management. Would think they had plenty of more important things to consider in the middle of this expanded accelerated drilling campaign at Red Setter ?!
What I do know is that the last few months I get more and more worried each time I see a RNS.
PS: One (far fetched but) possible explanation is that they want to buy another company, and will have to issue a lot of new shares. A company that very soon will produce gold and have a revenue stream for example?
GLA
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