Is It Time To Buy Ashford Hospitality Stock?

When what should be good for a stock makes the share price move lower, it’s time to pay attention. Such is the case with Ashford Hospitality Trust, Inc. AHT.

The company announced a reverse split. This usually happens when stocks fall below the $1 level and literally become penny stocks. The officers at the company think this reflects poorly on them, so they reverse split it. They think this will make their stock more attractive.

For example, suppose a company declares a 1-for-10 reverse split. If you had 10 shares and they were trading for 50 cents, your investment is worth $5. After the split, you would only have one share, but your investment is still worth the same amount ($5).

This marketing strategy has been used for a long time, but it usually doesn’t work.

See Also: The Best Case Scenario For Ashford Hospitality Trust

Ashford Hospitality could be yet another example. Since the announcement, the shares have been in a freefall.

Now the stock has reached important support around the $1.90 level. There’s a chance there is some type of a rebound, but if this support breaks, another large move lower could follow.