{"id":11563,"date":"2022-08-31T17:05:24","date_gmt":"2022-08-31T14:05:24","guid":{"rendered":"https:\/\/www.robomarkets.com\/blog\/?p=11563"},"modified":"2024-01-31T17:54:37","modified_gmt":"2024-01-31T14:54:37","slug":"reverse-stock-split-all-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.robomarkets.com.cy\/blog\/education\/reverse-stock-split-all-you-need-to-know\/","title":{"rendered":"Reverse Stock Split: All You Need to Know"},"content":{"rendered":"\n

This article is dedicated to such a phenomenon of the stock market as a reverse stock split<\/a>: why public companies use this process, and how it happens exactly. Also, there will be examples of stock consolidation, i.e., reverse stock split.<\/p>\n\n\n\n

<\/span>What is a reverse stock split?<\/span><\/h2>\n\n\n\n

A reverse stock split, also known as consolidation, means that the issuer consolidates the number of existing shares<\/a> of corporate stock into fewer, proportionally more valuable shares. While the number of securities held by shareholders is cut down, the shareholders get to keep the same part of the share capital as before the split. The main goal is to increase the share price.<\/p>\n\n\n\n

The reverse split coefficient represents the ratio by which the number of securities will be cut down. For example, if the coefficient is 2:1, an investor who used to have 20 shares of the company that cost 10 USD each will have 10 shares left in their portfolio with a value of 20 USD each.<\/p>\n\n\n\n

A company that has decided on a reverse stock split must issue a press release in advance, announcing the split coefficient and terms alongside other useful information about the consolidation.<\/p>\n\n\n\n

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<\/span>Why do companies carry out reverse splits?<\/span><\/h2>\n\n\n\n