Free course · Lesson 17 · 4 min
Reverse splits: what changes and what does not
In 4 minutes: what a reverse split changes, what it leaves alone, and why a company does one.
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0120 shares become 1
In a 1-for-20 reverse split, every 20 shares turn into 1 and the price is multiplied by 20. By itself, the split leaves the company worth the same, and each holder with the same slice.
02Why: back above $1
Nasdaq requires a bid of at least $1 (lesson 16). A reverse split is the fast way back above it.
- BeforePNDA bids under $1
- Jul 9PNDA announces a 1-for-20 reverse split
- Jul 13Effective: price × 20, back above $1
03What often does not shrink
The authorized count, the most shares the charter allows, is often left as it was. With 20 times fewer shares out, the room to issue new ones grows.
04After: a small float, and a window to sell
A small float can run hard on news. That run is also the company’s chance to sell new shares again.
053 checks after any reverse split
Sources
- Nasdaq Continued Listing Guide: the $1 minimum bid, and the notice a company must give Nasdaq before a reverse split.
- 17 CFR 210.5-02(29) (Regulation S-X): the shares authorized, on the balance sheet or in a note.
Panda Desk shows these rows for any small cap, next to your montage. tspanda.com
Not financial advice. PNDA is fictional, and nothing here is a recommendation to buy or sell.