Reverse stock split

A proportionate decrease in the number of shares, but not the 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 1 share for every 3 shares owned before the split. After the reverse split, the firm's stock price is, in this example, worth three times the pre-reverse split price. A firm generally institutes a reverse split to boost its stock's market price and attract investors. The New York Times Financial Glossary

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   A reduction of the number of outstanding shares in a company into a smaller number of stocks without cost to the shareholders who retain their proportionate holdings. This is not as common as a stock split and is usually only seen when the stock price is low. The move boosts the nominal price of each share, although it does not affect their value because each of the reduced number of shares now represents a larger share of ownership of the company. Also known as a negative stock split.
   ► See also Stock Split.

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reverse stock split UK US noun [C] (also reverse share split)
STOCK MARKET, FINANCE the act of reducing the number of shares a company trades without reducing the total value of the shares. This has the effect of increasing the value of each share in order to attract new investors: »

In May, the board will ask shareholders to approve a 1-for-10 reverse stock split in order to boost its share price above a dollar.


Financial and business terms. 2012.

Look at other dictionaries:

  • Reverse stock split — Reverse stock splitA reverse stock split or reverse split is the opposite of a stock split, i.e. a stock merge: a reduction in the number of shares and an accompanying increase in the share price. [ [http://www.sec.gov/answers/reversesplit.htm… …   Wikipedia

  • reverse stock split — n: a method of increasing the value of shares of corporate stock by calling in all outstanding shares and reissuing fewer shares having greater value compare stock split Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • 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… …   Financial and business terms

  • reverse stock split — The reduction in the number of corporate shares outstanding by calling in all shares and issuing a smaller number, though the capital of the corporation remains the same. It is the opposite of a stock split. Its effect is to increase the value of …   Black's law dictionary

  • Reverse Stock Split — A reduction in the number of a corporation s shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same. For example, a 1 for 2… …   Investment dictionary

  • reverse stock split — See also change in nominal value / consolidation Corporate action that consists of a change in nominal value, a consolidation. With this corporate action, the number of outstanding shares of stock is decreased without any change in the… …   Euroclear glossary

  • reverse stock split — noun a decrease in the number of outstanding shares of a corporation without changing the shareholders equity • Syn: ↑reverse split, ↑split down • Hypernyms: ↑decrease, ↑diminution, ↑reduction, ↑step down …   Useful english dictionary

  • stock split — n: the division of the outstanding shares of a corporation into a larger number of shares thereby reducing the value of each share but not the total value of each holding compare reverse stock split ◇ The purpose of a stock split is to make the… …   Law dictionary

  • Stock split — Occurs when a firm issues new shares of stock but in turn lowers the current market price of its stock to a level that is proportionate to pre split prices. For example, if IBM trades at $100 before a 2 for 1 split, after the split it will trade… …   Financial and business terms

  • stock split — Occurs when a firm issues new shares of stock and in turn lowers the current market price of its stock to a level that is proportionate to pre split prices. For example, if IBM trades at $100 before a two for one split, after the split it will… …   Financial and business terms

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