investing guide

What Is The Result Of A Reverse Stock Split

reverse stock split

What is the result of a reverse stock split?

A reverse stock split usually occurs as a matter of last resort for a company that is in trouble of being delisted from one of the major stocks exchanges for a low stock price. These companies will essentially raise the price of their stock that each shareholder has but you will then own less shares.

As an example:

You own 1000 shares of a stock currently selling at .50 cents a share. After a 10 for 1 reverse stock split you would own 100 shares of stock that is now worth $5.00 a share.

From a shareholders stand point your total investment has not changed. This simply allows the corporation more time to turn the company around without getting delisted.