Reverse stock split


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Reverse stock split

A proportionate decrease in the number of shares, but not the total value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split. For example, a 1-for-3 split would result in stockholders owning one share for every three shares owned before the split. After the reverse split, the firm's stock price is, in this example, three times the pre-reverse split price. A firm generally institutes a reverse split to boost its stock's market price. Some think this supposedly attracts investors.

Reverse Stock Split

The act of a publicly-traded company reducing the number of outstanding shares while maintaining the same market capitalization. In other words, a company engages in a reverse stock split in order to increase its share price. For example, a company with a share price of $1.50 may cut its number of shares in half so that the price goes to $3. Companies only conduct a reverse stock split if it desires to boost its share price when it is unable to do so by other means. Some companies consider reverse stock splits a last resort to avoid delisting from the exchange as the result of a share price that is too low.

reverse stock split

A proportionate reduction in the shares of stock held by shareholders. For example, a one-for-four split would result in stockholders owning one share for every four shares owned prior to the split. A reverse stock split has no effect on a firm's financial and operational performance and is often designed only to boost the market price of the stock so it won't be delisted from trading on an exchange that imposes a minimum share price requirement. Also called split down. Compare split.

Reverse stock split.

If a company's stock is trading at a low price, the company may decide to reduce the number of existing shares and increase their price by consolidating the shares.

For example, a 1-for-2 reverse stock split halves the number of existing shares and doubles the price. In that case, if you hold 100 shares of a stock selling at $5 a share, for a combined value of $500, in a 1-for-2 reverse stock split, you would own 50 shares valued at $10 a share, which would still give you a combined value of $500. Stocks may be reverse split 1-for-5, or 5-for-10, or in any ratio the company chooses.

Reverse splits are generally used to ensure that a stock will continue to meet listing requirements on the market where it is traded or to encourage purchases by institutional investors, who may not buy stocks priced below a specific point.

References in periodicals archive ?
Further, the reverse stock split will take effect after the market close on 20 June 2019.
The reverse stock split will reduce the number of shares of the company's outstanding common stock from approximately 16,737,009 million shares to approximately 2,789,502 million shares.
The reverse stock split is intended to increase the market price of the company's common stock with regard to its intended distribution of all of the shares of common stock of its wholly owned subsidiary, Corteva Inc., which holds the company's Agriculture Business, to the holders of the company's common stock on a pro rata basis.
A reverse stock split would reduce the total number of Rite Aid's issued and outstanding common shares, resulting in an increase in the price per share.
This reverse stock split process will start as of 26 February 2019, in accordance with the terms of the reverse stock split notice.
If stockholders approve the reverse stock split, Rite Aid's board will select a reverse stock split ratio of either l-for-10,1-for-15 or 1-for-20 so that, depending on the ratio chosen, either 10,15 or 20 shares of issued and outstanding common stock will convert into one share of common stock.
Following the reverse stock split, the number of authorised shares of the company's common stock will remain at 200,000,000, while the number of outstanding shares will decrease from approximately 63.2 million to 6.3 million.
The Reverse Stock Split affected all record holders of the Company's common stock uniformly and did not affect any record holder's percentage ownership interest in the Company, except for de minimus changes as a result of the elimination of fractional shares.
With the reverse stock split, every five and one-half shares of the company's common stock issued and outstanding will be converted into one fully paid and non-assessable share of the company's common stock.
The reverse stock split will affect all stockholders uniformly and will not alter any stockholder's percentage interest in the company's equity, except to the extent that the reverse stock split would result in a stockholder owning a fractional share.
There will be no change in the Company's NASDAQ ticker symbol (CMLS) as a result of the reverse stock split. The new CUSIP number that will be applicable to the Class A common stock after the reverse stock split is 231082603.
Shareholders holding less than 25 shares of common stock immediately prior to the reverse split will not receive fractional shares in the reverse stock split, but will instead have their shares converted into the right to receive a cash payment in exchange for and in proportion to the fractional share interests resulting from the reverse stock split.