Obviously, some reverse splits "work out" and some don't. It depends on the fundamentals of the company, and most importantly, what investors perceive of as the reason for management taking that rather unusual action. In the case of SG, they must have known it would be controversial. I doubt they realized it would stir up the hornet's nest it apparently has on the stock discussion boards, but as I've said before, they aren't doing it for retail investors. They are doing it for prospective institutional investors, and they must already have a pretty good idea what THEIR reaction will be.
Although the announcement doesn't seem to have had much of an adverse effect - if any - to date, I'm prepared for the possibility that enough current investors will accept the conventional wisdom that reverse splits are ALWAYS BAD and a sign of weakness (or even desperation) that it causes the sp to go down moderately for a brief period. For me this will just present another buying opportunity, because I am confident that it will only move shares into stronger hands, especially into the hands of those many institutional investors who will now have greater accessibility to the stock. The fact is that I haven't heard anything in regard to the risks of a r/s that Nolan Watson & Co. aren't undoubtedly fully aware of, and - with all their years of experience - haven't taken into account. If they decide to go ahead with this move, I can only assume that they have a very good reason for doing so.
The following is pure speculation on my part, but if you've followed Mr. Watson's rare comments about the state of the overall economy in the last few interviews, my sense is that he has become increasingly pessimistic in recent months, and perhaps that is contributing to the desire to get an uplisting a bit sooner than was previously envisioned. You do have to ask yourself why a man who is ordinarily so patient and methodical in growing the company would consider resorting to something as controversial as a reverse split to hurry up the process, especially at a time when the company is doing so well. I think you have to conclude that he either he knows something we don't, or that we are all very, very wrong about his judgment and/or competency. I for one am more than willing to trust them on this call. Time will tell if it is the right one, but I know where I'm putting my vote - and my money.
Good post Zen, I agree with you...it could be that the R/S will drive the stock down and the retail investors will flee..at the same time those "in the know" will pick up cheaper shares...like you say "only time will tell".