Jul. 24 at 6:25 AM
$SOS
Why It’s Generally Bad/Cautious for Retail Holders Long-Term
1. It Cleans Up the Books to Mask Past Losses
Reducing the official par value creates a theoretical accounting credit that SOS Limited will use to wipe out accumulated past operating losses off their books. While a "cleaner" balance sheet sounds nice, it highlights that the company has accumulated heavy losses over time.
2. It Paves the Way for Dilution
Companies rarely perform a capital reorganization in a vacuum. In corporate restructuring, lowering the par value down to a fraction of a cent is almost always a required prerequisite to:
Issue massive amounts of new shares in the future. (When a company issues millions or billions of new shares to raise capital, it waters down/dilutes existing retail holdings).
