definition of a Reverse stock split.

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definition of a Reverse stock split.

posted on May 31, 2008 01:01PM

This is a definition of a reverse stock split from investopedia. Link: http://www.investopedia.com/terms/r/...

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 reverse split means you get half as many shares, but at twice the price. *It's usually a bad sign if a company is forced to reverse split* - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.

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