1. What Is A 1 For 100 Reverse Stock Split?

A 1 for 100 reverse stock split is a corporate action where a company reduces the number of its outstanding shares by converting every 100 shares into 1 new share. This increases the share price proportionally while maintaining the same market capitalization.

2. How Does The Calculator Work?

The calculator uses the reverse stock split formula:

Where:

• Old Shares — Number of shares before the reverse split
• Old Price — Price per share before the reverse split (USD)
• New Shares — Number of shares after the reverse split
• New Price — Price per share after the reverse split (USD)

Explanation: The reverse split reduces the number of shares outstanding and increases the share price proportionally, keeping the total market value unchanged.

3. Importance Of Reverse Stock Split Calculation

Details: Understanding reverse stock splits is crucial for investors to accurately track their portfolio value, number of holdings, and per-share metrics after such corporate actions.

4. Using The Calculator

Tips: Enter the number of shares you own before the split and the pre-split price per share. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why do companies perform reverse stock splits?
A: Companies typically perform reverse splits to increase their share price to meet exchange listing requirements, improve perception, or attract institutional investors.

Q2: Does a reverse stock split affect my investment value?
A: No, the total value of your investment remains the same immediately after the split, though the number of shares decreases and the price per share increases proportionally.

Q3: What happens to fractional shares?
A: Most companies cash out fractional shares rather than issuing them, so investors receive cash equivalent for any fractional share resulting from the reverse split.

Q4: How does this affect options contracts?
A: Options contracts are adjusted to reflect the reverse split. The number of contracts may decrease while the strike price increases proportionally.

Q5: Are reverse splits generally positive or negative?
A: Reverse splits are often viewed negatively as they're frequently used by struggling companies to avoid delisting, though they can sometimes be part of legitimate corporate restructuring.