Another Reverse Split Goes Splat
Yesterday's close marked one-week since AIG's 1:20 reverse stock split . With a one-week decline of over 40% versus an S&P decline of only 4.2% over the one-week period, will AIG's stock price rebound from this sharp decline, or will its shares continue to plummet?
Unfortunately and more often than not, companies that attempt to lift their share prices from penny-stock levels through reverse splits end up doing more damage than help. Understanding that some funds and exchanges have rules on minimum share prices, they view the action as a way to put lipstick on the pigs that they are or at least as a stop gap measure until they can turn the company around. AIG's move, seems to have just given American taxpayers more to be frustrated with.
Here is a look at some other reverse stock splits from the past few years and how the companies' stock prices fared versus the S&P500 in the weeks that followed: