A reverse split is a corporate action whereby a company reduces the number of shares outstanding and increases the price of its stock. A company may decide to use a reverse split to shed its status as a penny stock, or to avoid being delisted. A common type of reverse stock split is 1:2, which means that each investor receives one share for every two that he or she already holds. In other words, the investor gets half as many shares, but they're worth twice as much as before.

As the question states, a company that has undergone a reverse stock split often gets the letter "D" attached to the end of its ticker symbol. This letter is used to designate a company that is undergoing a stock split of some sort (most often a reverse split), or some form of corporate reorganization. This letter is generally attached to the end of the ticker for approximately 20 trading days before it's removed.

For further reading, see Understanding The Ticker Tape, What Are Corporate Actions? and Understanding Stock Splits.

  1. Why would a company perform a reverse stock split?

    Understand what a reverse stock split entails, and learn what the common motivations are for a company to perform a reverse ... Read Answer >>
  2. What are reverse stock splits?

    A reverse stock split is a corporate action in which a company reduces the number of shares it has outstanding by a set multiple. ... Read Answer >>
  3. How is a company's market capitalization affected by a reverse stock split?

    Find out about reverse stock splits, why a company would use a reverse stock split and how a company's market capitalization ... Read Answer >>
  4. How and why does a stock split?

    Learn why stock splits do not occur very often for individual stocks, and understand the impact of reverse stock splits on ... Read Answer >>
  5. What is the effect of a reverse split on the stock's value?

    Find out more about reverse stock splits, how to calculate a reverse stock split and how a reverse stock split affects a ... Read Answer >>
  6. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Answer >>
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  1. Reverse Stock Split

    A corporate action in which a company reduces the total number ...
  2. Stock Split

    A corporate action in which a company divides its existing shares ...
  3. Reverse/Forward Stock Split

    A stock split strategy that includes the use of a reverse stock ...
  4. Split Adjusted

    A modification made to a security's price that takes into consideration ...
  5. Closing Price

    The final price at which a security is traded on a given trading ...
  6. Split-Up

    A corporate action in which a single company splits into two ...
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