Reverse Split

A reverse stock split is a measure taken by companies to reduce their number of outstanding shares in the market. Existing shares are consolidated into fewer, proportionally more valuable, shares, resulting in a boost to the company’s stock price.

Why would a company perform a reverse stock split?

A company may perform a reverse stock split to boost its stock price by decreasing the number of shares outstanding. The reverse stock split has no inherent effect on the company's value, with market capitalization remaining the same after it’s executed. This path is usually pursued to prevent a stock from being delisted or to improve a company's image and visibility.