Consolidation :18 May 2023 12:38
Someone raised the issue of Consolidation recently .
imo : ~~~ This is a double edged sword and it`s always dangerous to play with knives !
On the face of it it would seem sensible to reduce the number of shares in circulation to give the `appearance` that there is quality in the more highly rated , higher priced stock .
The fact is , the market cap would theoretically remain the same as would the value of your investment . Traders are unlikely to welcome such a move , as shifting large bundles of more highly priced stock becomes more problematical , this would also affect large shareholders making the stock less liquid . In practice , reverse share splits often have the reverse of the benefits that were hoped for . There are complex administrative costs and approvals required the result is usually a fall of c. 15% in the value of the stock , although this may recover in time assume that the Company is in a positive or growth development phase . But , often reverse splits are used for Companies in financial difficulties and the practice has bad connotations further impacting negative market response ( I have been a `Victim` of these machinations in the past !) . Small share holders I suspect would be rather displeased should their investment be savaged by some 15% reduction in value which is one of the reasons why a reverse split is perceived with negativity .The irony is that post split and assuming continued success , the sp can become even more illiquid , and although the share price has risen , Companies then may start considering a rights issue creating further dilution , but possibly future gains .
In our case the call for a US listing seems appealing ~ But ~ here again there are a myriad of issues to be considered , not least the initial costs and then subsequent costs of meeting the very much more stringent regulations of the US markets ( Reporting / accounting / transparency / liquidity ...etc ) and there can be no guarantees that Americans will stampede to buy the shares . At this stage , surely any free funds available should be directed at ongoing Company development ~ and there`s a helluva lot of that to do !
Bottom line ~~~ This is a bit of a minefield and while I agree that there are many , very many , short comings with the shabby AIM market , at this point in the Company`s development we are probably best served to maintain the status quo .
This is a subject for discussion , consideration and decision by the BoD and I feel there are much more important issues that must take priority over what I consider to be a bit of an unnecessary premature fiscal gamble . A bit of kite flying .
.
Let sleeping dogs lie !
VGLA ~ Investors .
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