A Reverse Split is referenced in the basher's "101 Ways to get Shareholders to Sell" handbook to cause confusion, raise fear and induce panic selling. Reverse splits, dilution, CEO's age, birth place, etc. all have to be taken in context of the situation. Usually the person or people raising these "concerns" will have multiple aliases and post on multiple message boards multiple times a day in attempt to drive the share price lower.

From Rick Pearson
Senior Contributor to TheStreet

"Reverse splits are a sign of good things for companies on the way up, but a sign of bad things for companies on the way down.

In order to meet the minimum share price requirements for Nasdaq, many companies will conduct a reverse split. This is perfectly acceptable to the exchange, and the post-split share price will be evaluated accordingly.

Using a reverse split to raise the share price and obtain an uplisting is a very positive sign for a company and is much different than companies that use a reverse split to prevent being delisted. Once again, the confusion relates to delisting as opposed to uplisting. Many people who don't focus on uplistings only encounter reverse splits in the context of companies that are trying to stave off a delisting, so in many people's eyes a reverse split is a sign of a troubled company."