I am a little confused on some of the discussion about supply/demand of shares. This is not the same as when the supply of beer goes down (which would be tragic) so the price goes up. I think investors think in terms of money when they buy shares. So, if you want to invest $10,000, and the SP is $2, you buy 5,000 shares. If there is a 5:1 RS, and the SP is now $10, and you want to invest $10,000, you buy 1,000 shares. So it is not really like the supply has shrunk 5x, the amount of shares (in terms of investment dollars) is the same.
Is it not really a function of how many buyers vs. sellers there are, and if there are few sellers there is limited liquidity (i.e. low volume and harder to turn your shares into cash)? After a 5:1 RS there is less volume but also you need less volume to sell the amount of dollars you want to sell for. The NASDAQ should increase liquidity but I do not see how a 5:1 RS decreases liquidity.
I likely just don't get it, so thought it was worth asking as I must be missing something.
Thanks in advance,
Quan
