New Shares = Old Shares / Ratio; New Price = Old Price x Ratio
A reverse split merges shares into fewer, higher-priced ones — often used to prop up a low stock price.
What it is
A reverse stock split consolidates existing shares into fewer shares, for example one new share for every ten old ones in a 1-for-10 reverse split. The price per share rises in proportion, so the total value of a holding is unchanged immediately after. It is the opposite of a forward stock split.
Why it matters
Companies often do reverse splits to push a low share price back above an exchange's minimum listing threshold and avoid delisting. The pitfall is that a reverse split frequently signals a struggling business, and the higher price alone fixes nothing about the underlying fundamentals.
How it's calculated
Apply the reverse ratio: divide the share count by the ratio and multiply the price by the same ratio. A 1-for-5 reverse split leaves one-fifth as many shares at five times the price.
How Quintarthai uses it
Reverse splits appear in the Stock Splits tab on a company's deep-analysis page, and Quinn flags delisting risk for low-priced names in the app.
Cross-border note. Both the NYSE/Nasdaq and the TSX set minimum-price and listing standards, so a reverse split to maintain a listing can happen on either side of the border.
FAQ
Is a reverse split a bad sign?
Not always, but it is often used by companies trying to meet a minimum listing price, so it warrants a closer look at the fundamentals.
What happens to fractional shares in a reverse split?
Fractions that result from the ratio are usually cashed out at the prevailing price rather than rounded into whole shares.
Check your understanding
A company trading at a very low price executes a 1-for-10 reverse split. What is the most common reason a company does this?
Reverse splits are frequently used to lift a low share price above an exchange's minimum requirement and avoid delisting, even though they change nothing about the underlying business.