What is a reverse stock split?

Companies might undertake a reverse stock split to boost their share prices. We look at what this means for investors.

What is a reverse stock split?
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A reverse stock split is a corporate action that reduces the number of outstanding shares of a public corporation. The aim of this is to increase the price per share, which a company might need to do to meet exchange listing rules or make it easier to raise money from new investors. 

A reverse stock split is the opposite of a traditional stock split, which increases the number of shares, decreasing the share price. Companies also do this to make it easier for investors to buy and sell shares in the business.  

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Jacob Wolinsky

Jacob is an entrepreneur, hedge-fund expert and the founder and CEO of ValueWalk. 

What started as a hobby in 2011 morphed into a well-known financial media empire focusing in particular on simplifying the opaque world of the hedge fund. 

Before devoting all his time to ValueWalk, Jacob worked as an equity analyst specialising in mid- and small-cap stocks. Jacob also worked in business development for hedge funds. 

He lives with his wife and five children in New Jersey. 

Jacob only invests in broad-based ETFs and mutual funds to avoid any conflict of interest that could arise from buying individual stocks.