Cumulus Artificially Inflates Stock Price, Here’s How.

Cumulus Shell Game

How to arti­fi­cial­ly inflate a stock price

Cumu­lus stock has been sooooo low that they are being threat­ened with delist­ing from the exchange.  Enter the “reverse stock split” (10/12/16). Here Cumu­lus takes all their shares and con­verts each 8 shares into one.

So lets say shares are worth 32¢ a share. ? Mul­ti­ply that times 8 and they should get $2.56 per share which doesn’t sound as mea­ger. The prob­lem is that traders know that this is a des­per­ate move.  Today Cumu­lus trad­ed at $1.05 which means that had they not split, they would be under 14¢ per share. Will they have to do this maneu­ver twice…three times? How low can they go?

Reverse splits usu­al­ly sig­nal trou­ble and do noth­ing to cor­rect what’s ail­ing the com­pa­ny,” says Frank Fer­nan­dez, the man­ag­er of equi­ty trad­ing at J.P. Turn­er & Com­pa­ny in Atlanta. “It’s a maneu­ver used to get the stock price over a dol­lar so the stock doesn’t get delist­ed, though sta­tis­tics show that prob­a­bly three quar­ters of recent­ly reversed-split stocks trade low­er fol­low­ing the split.”

So how did we get here?

Greedy con­sol­i­da­tion pro­duces mon­strous debt which caus­es the fir­ing of tal­ent­ed DJs and staff.  It was the local staff that made radio worth more than $1.05 per share.

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