What is a 1-For-100 Reverse Stock Split?
When most people hear the term “stock split,” they usually consider it to be a good thing. In a 2-for-1 split, shareholders receive an additional share for each share they own, although the stock price is halved. Much less common is a reverse stock split. It involves giving the shareholders fewer shares for the amount they own, although the price of the stock increases.Reverse Split May Indicate ProblemsA reverse stock split may indicate the company is having financial problems. Often a company does a reverse split to prop up its stock price. Otherwise, if the stock falls below a certain price, the company runs the risk of the stock being delisted, or taken off the exchange where it is traded.Reverse Split Means Fewer SharesIn a 1-for-100 reverse stock split, shareholders receive one share of stock for each 100 they own.Price of Stock RisesIn a reverse stock split, the price of the stock goes up accordingly. Say the company that had the reverse split was trading for 36 cents a share. A
