It's not nonsense. If you've got a 1-cent stock, it can only fall one cent. If it reverse splits to 50 cents, it can fall 50 cents. I've got a couple stocks that did just that - ALXP.PK did exactly that. So you end up with 1.50th of the number of shares you used to have at the same price you had before the split. Capiche? Reverse splits are the last gasp of desperate management to make their stock look more attractive. If company owners manage well, and the company prospers, the stock will go to 50 cents without a reverse split.