You are right except it gives more room for shorts

You are right except it gives more room for shorts to drive it further down. If you have a stock at .0001 and a reverse split brings the price up to .10 then selling drives pps to .005, boom your investment cut in half again whereas at .0001 unlikely to get to .00005 as there is unlikely any buyers left. This is why r/s is a death blow for many penny stocks. Revenue negates the problem. Unfortunately the more shares outstanding the more revenue is need to justify move up.