Shares of Vast Resources PLC (LON: VAST) plunged 10.9% after the company announced plans to consolidate its share capital in a 100 to 1 reverse stock split to boost its stock price and make the firm attractive to more investors.
Today’s announcement is a positive development for the mining company. Yet, its share price kept falling even though a higher share price is good for the firm and its shareholders over the long term.
Vast Resources is a firm that is quite underrated by most investors even though it started generating revenues from its Baita Plai Polymetallic Mine (BPPM) after completing the first shipment of concentrate from the mine.
There is no solid logical why Vast shares have been falling since December 2020 despite a series of positive announcements from the company and its upbeat prospects over the next six months.
However, it is not our job to fight the markets but to work with it since the market represents the majority opinion, which determines share prices. Buying Vast shares over the past few months has been like trying to catch a falling knife as it has kept falling.
Regardless, I’m still bullish on the company’s long-term prospects because, unlike other similarly-priced stocks that are usually yet to generate revenues. Vast Resources is already generating sales, which is expected to continue in future.
The consolidation of its share capital is a brilliant move that will push its share price above 8p, making it possible for institutional investors to back the company and hopefully lift its shares over the long term.
Vast Resources shareholders are expected to approve the share consolidation in a virtual General Meeting on Wednesday, 5 May 2021.
Vast Resources share price.
Vast Resources shares fell 10.92% to trade at 0.0824p after falling from Monday’s closing price of 0.0925p.
Should you invest in Vast Resources shares?
Vast Resources shares are traded on the London stock exchange’s AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Vast Resources shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies