AIG reverse split today. Stockholders receive 1 share for every 20. It's down more than 22% from yesterday's close on huge volume.
Which brings to mind why. Nothing changed really. If you had x shares of AIG yesterday, today you have x/20 with a price 20 times higher.
But mentally, I'm thinking that people are not prepared for it. With a $1 stock, the maximum downside is a buck. If the stock is $20, suddenly horrors, they think "I could lose 20 dollars a share!!" Investors are just dumb that way...
Some Of Yesterday's Buyers Of AIG Shares Couldn't Sell Today
Article at Reuters
American International Group Inc (AIG.N: Quote, Profile, Research) shares tumbled nearly 20 percent on Wednesday following a 1-for-20 reverse stock split by the troubled insurer.
The shares were down $4.53, or 19.5 percent, to $18.67 in early-afternoon trade on the New York Stock Exchange.
The reverse split was approved at the AIG annual meeting on Tuesday. The shares closed at a pre-split $1.16 on Tuesday.
Donald Light, an analyst with Celent in San Francisco, said, "It looks like AIG was trying to seek some kind of psychological advantage, but what they were hoping for did not occur."
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