Investing term

What is Reverse split?

A split run in the opposite direction — fewer shares, higher per-share price.

A reverse split reduces a company's share count by a set ratio while raising the per-share price by the same ratio, leaving total value unchanged. Companies use it to lift a low price — often to meet an exchange's minimum listing requirement. Because it's frequently a sign of a struggling stock, a reverse split can be a yellow flag worth investigating.

For example

In a 1-for-10 reverse split, ten $1 shares become one $10 share — your total value is identical, but the higher price may signal trouble.

Reverse split is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

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Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
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