Pronunciation: [ɹɪvˈɜːs stˈɒk splˈɪt] (IPA) 
The correct spelling of the term "reverse stock split" is /rɪˈvɜːs ˈstɒk splɪt/. The word "reverse" is spelled with an "e" after the "r" sound, while "stock" is spelled with an "o" and "k" sound. "Split" is spelled with an "i" sound and a "t" at the end. This term is used in finance to describe a reduction in the number of outstanding shares of a company by merging multiple shares into a single share.
A reverse stock split refers to a financial maneuver undertaken by a company to decrease the total number of its outstanding shares while proportionally increasing the price of each individual share. In simple terms, a reverse stock split is the opposite of a regular stock split.
In a reverse stock split, the company reduces the number of existing shares to create a smaller pool of shares available for trading on the open market. This is usually done by merging multiple shares into one, resulting in a decrease in the total number of outstanding shares. However, the overall value of the company remains the same.
The primary objective of a reverse stock split is to boost the per-share market price of the company's stock. By reducing the number of shares, the individual price of each share is proportionally increased. This can be seen as a strategy to attract more investors, particularly institutional investors who may have minimum price requirements for investment.
Reverse stock splits are typically carried out by companies that have experienced a decline in their stock price. They are often seen as a maneuver to improve the company's appearance and regain compliance with certain stock exchange listing requirements. In some cases, a reverse stock split may also be executed to reduce trading volatility or increase the stock's appeal to potential investors.
It is important to note that a reverse stock split does not impact the overall value of an investor's holdings in a company. However, it can affect the liquidity of the stock and may have implications for shareholders, depending on the specific terms and conditions set by the company.
