Could Molycorp Do a Reverse Stock Split?

Writing for Seeking Alpha, Shock Exchange suggested that rare earth producer Molycorp (NYSE:MCP) could engage in a reverse-stock split in coming weeks. The author noted that a potential delisting for Molycorp is still in effect, and suggested that management would engage in a reverse stock split before allowing the stock to be delisted.

As quoted in the publication:

A reverse stock split would not necessarily increase the value of the company, or get Molycorp out of its dire financial straits. However, it would keep the stock afloat while the company seeks to raise additional capital. That capital raise could come the form of debt, equity or a combination of both. If the stock free falls due to a delisting, it could hurt the company’s ability to raise additional capital; based on management’s prior capital raises – sometimes at long odds – I do not believe management would let that happen.

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