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Reverse Stock Split

Market Mechanics

A reverse stock split combines several shares into one.

The share count falls, the price rises by the same ratio, and the total value does not change. It is often used by companies whose price has fallen sharply, to meet the exchange's $1 minimum price requirement, which is why the market frequently reads it as a sign of weakness.

Example

In a 1-for-10 reverse split, 1,000 shares at $0.80 become 100 shares at $8; the total is still $800.

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