Reverse Stock Split Calculator
Use this tool to determine how many shares you will own after a company executes a reverse stock split.
A reverse stock split reduces the number of outstanding shares by a specified ratio, typically increasing the stock price proportionally. Enter your original number of shares and the split ratio (e.g., enter 10 for a 1-for-10 split).
Enter Split Details
Understanding Reverse Stock Splits
What is a Reverse Stock Split?
A reverse stock split is a corporate action where a company reduces the total number of its outstanding shares. This is done by converting a certain number of existing shares into one new share. For example, in a 1-for-10 reverse split, ten old shares are combined to create one new share.
Why Do Companies Do Reverse Splits?
Companies often perform reverse splits to:
- Increase the stock price per share to meet minimum listing requirements for exchanges like the NYSE or Nasdaq, or to avoid delisting.
- Make the stock appear more attractive to investors who may perceive low-priced stocks as risky ("penny stocks").
- Reduce administrative costs associated with having a large number of shareholders with small positions.
How Does It Affect Shareholders?
While the number of shares decreases, the total value of a shareholder's position theoretically remains the same immediately after the split (ignoring market reactions and fractional shares). For example, 1000 shares at $1 before a 1-for-10 split are worth $1000. After the split, 100 shares (1000/10) at a theoretical price of $10 per share would still be worth $1000.
A key consideration is fractional shares. If your original share count is not a perfect multiple of the split ratio (e.g., 155 shares in a 1-for-10 split resulting in 15.5 new shares), the company typically does not issue the fraction (0.5 shares). Instead, this fractional share is usually cashed out based on the post-split market price.
Reverse vs. Forward Stock Split
A reverse split *reduces* the number of shares and *increases* the price per share. A forward split *increases* the number of shares and *reduces* the price per share.
Reverse Stock Split Examples
Here are some scenarios demonstrating reverse stock split calculations:
Example 1: Simple Whole Number Result
Scenario: You own 1000 shares. The company announces a 1-for-5 reverse split.
Input: Original Shares = 1000, Ratio Factor = 5
Calculation: New Shares = 1000 / 5 = 200
Result: You will own 200 shares.
Example 2: Fractional Share Result (Common)
Scenario: You own 750 shares. The company announces a 1-for-10 reverse split.
Input: Original Shares = 750, Ratio Factor = 10
Calculation: New Shares = 750 / 10 = 75
Result: You will own 75 shares.
Example 3: Fractional Share Payout Scenario (Partial Shares)
Scenario: You own 155 shares. The company announces a 1-for-10 reverse split.
Input: Original Shares = 155, Ratio Factor = 10
Calculation: New Shares = 155 / 10 = 15.5
Result: You will typically own 15 whole shares, and the fractional 0.5 shares will likely be cashed out.
Example 4: Very Small Position Resulting in Cash Payout
Scenario: You own 20 shares. The company announces a 1-for-50 reverse split.
Input: Original Shares = 20, Ratio Factor = 50
Calculation: New Shares = 20 / 50 = 0.4
Result: Since the result is less than 1 share, your entire position (0.4 shares) will likely be cashed out based on the post-split share value.
Example 5: Using a Different Ratio (1-for-8)
Scenario: You own 1200 shares. The company announces a 1-for-8 reverse split.
Input: Original Shares = 1200, Ratio Factor = 8
Calculation: New Shares = 1200 / 8 = 150
Result: You will own 150 shares.
Example 6: Another Fractional Result (1-for-3)
Scenario: You own 100 shares. The company announces a 1-for-3 reverse split.
Input: Original Shares = 100, Ratio Factor = 3
Calculation: New Shares = 100 / 3 ≈ 33.3333
Result: You will typically own 33 whole shares, and the fractional ~0.3333 shares will likely be cashed out.
Example 7: High Number of Shares and Ratio (1-for-20)
Scenario: You own 50,000 shares. The company announces a 1-for-20 reverse split.
Input: Original Shares = 50000, Ratio Factor = 20
Calculation: New Shares = 50000 / 20 = 2500
Result: You will own 2500 shares.
Example 8: Zero Original Shares
Scenario: You own 0 shares. The company announces a 1-for-10 reverse split.
Input: Original Shares = 0, Ratio Factor = 10
Calculation: New Shares = 0 / 10 = 0
Result: You will continue to own 0 shares.
Example 9: Minimal Ratio Factor (1-for-1, effectively no split)
Scenario: You own 500 shares. The company announces a 1-for-1 reverse split (this is rare/unusual for reverse splits, but mathematically works).
Input: Original Shares = 500, Ratio Factor = 1
Calculation: New Shares = 500 / 1 = 500
Result: You will own 500 shares (no change).
Example 10: Using a Decimal Ratio Factor (Less common, but possible calculation input)
Scenario: You own 1000 shares. You want to see the effect if the ratio factor was 2.5 (meaning 2.5 old shares for 1 new share - mathematically equivalent to a 2-for-5 forward split, but using the reverse split division calculation).
Input: Original Shares = 1000, Ratio Factor = 2.5
Calculation: New Shares = 1000 / 2.5 = 400
Result: You would own 400 shares.
Frequently Asked Questions about Reverse Stock Splits
1. What is the formula for calculating shares after a reverse split?
The formula is simple: New Number of Shares = Original Number of Shares / Reverse Split Ratio Factor. The ratio factor is the second number in the '1-for-X' ratio (X).
2. How does a 1-for-10 reverse split work?
For every 10 shares you owned before the split, you will receive 1 new share. If you had 1000 shares, you'll have 100 shares after a 1-for-10 split (1000 / 10 = 100).
3. What happens to fractional shares?
If the calculation results in a fraction (e.g., 15.5 shares), you typically receive the whole number of shares (15) and the fractional part (0.5) is cashed out by the company based on the post-split market price. Policies may vary slightly by company and broker.
4. Does a reverse split change the total value of my investment?
Immediately after the split, the theoretical total market value of your shares should remain the same (Number of Shares * Theoretical Price per Share). However, the market often reacts to reverse splits, and the stock price performance afterwards can vary. Fractional share cash-outs can slightly alter the total value received.
5. Why would a company do a reverse split instead of a forward split?
A reverse split is used to increase the stock price and decrease the number of shares, often to meet exchange listing requirements (like maintaining a minimum share price) or improve market perception. A forward split does the opposite: decreases price, increases shares, typically done to make a high-priced stock more accessible or liquid.
6. How does a reverse split affect the stock price?
The stock price per share is theoretically multiplied by the split ratio factor. For example, after a 1-for-10 split, a $1 stock would theoretically trade around $10 per share. The actual price performance can differ due to market factors and how investors perceive the split.
7. Does a reverse split affect voting rights?
No, your percentage of ownership in the company remains the same. Although you have fewer shares, each share represents a proportionally larger piece of the company, so your total voting power is unchanged.
8. How are stock options and warrants affected by a reverse split?
Stock options, warrants, and other derivatives are typically adjusted proportionately. The number of shares underlying the option/warrant is reduced by the split ratio, and the strike price is increased by the same ratio, keeping the total value of the option/warrant theoretically the same immediately after the split.
9. What are common reverse split ratios?
Common ratios include 1-for-2 (often written as 1:2), 1-for-5 (1:5), 1-for-10 (1:10), 1-for-20 (1:20), and can be as high as 1-for-50, 1-for-100, or even higher depending on the company's needs and previous share price.
10. When does a reverse stock split take effect?
The company announces an effective date and time for the split. The change is usually processed overnight, and shareholders will see the adjusted number of shares and price in their brokerage accounts on the morning of the effective date or the next trading day.
