AT&T's Ridiculous Reverse Stock Split
from the going-nowhere-fast dept
I had thought this last week when I first heard about AT&T's decision to do a reverse stock split, and am glad that someone wrote a column at Business 2.0 pointing out what a bad idea this is. Besides being the first Dow component to ever do a reverse stock split, it basically shows that AT&T is giving up. They claim they're doing it because institutional investors have in irrational fear of single digit stocks. However, as pointed out in the column, if that's really the case then shouldn't they be making plans to try to raise their stock above the $10 mark, instead of artificially inflating it? The only reason to do the reverse split is because they're admitting their stock really isn't worth more than $10. Reverse stock splits have long been associated with desparate companies making a last gasp effort to turn their fortunes around. Almost everyone sees through these plans - and just because the brand name is AT&T, it doesn't make the reverse stock split any different.
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AT&T's reverse stock split
As far as I can see, a stockholder is losing value. What am I missing? Will there be an expected stock price increase after the reverse stock split? Is that where we will get increased value?
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at&t stock split
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