Avoid Reverse Stock Splits

When we are looking for a penny stock to invest in we have a list of criteria to follow, one of them is to avoid stocks that have recently undergone a reverse stock split or are planning on doing a reverse stock split. There are a number of reasons why a company conducts a reverse stock split, such as: attract more institutional investors, reduce expenses by "shaking out" the individual investor and to avoid de-listing. The latter, being the most common reason.

There have been numerous studies conducted on reverse stock splits and with stock that trade on the OTCBB and NASDAQ there is an overwhelming negative price impact. To learn more about reverse stock splits, click here.

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