A:

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.

RELATED FAQS

  1. How can I spot trading opportunities looking at year-to-date (YTD) performance?

    Discover how to spot trading opportunities by looking at year-to-date performance. YTD performance is an effective tool to ...
  2. What types of corporations would be expected to have higher growth rates than more ...

    Understand factors that contribute to certain corporations growing at higher rates than other corporations to the benefit ...
  3. What tax implications are there for parties involved with a reverse repurchase agreement?

    Learn about the tax consequences that the buyer can face as a result of a reverse repurchase agreement ("reverse repo") with ...
  4. What happens if a software glitch fails to execute the strike price I set?

    Find out why trading software can be a double-edged sword, and learn what to do if your trade isn't executed because of a ...
RELATED TERMS
  1. Valium Picnic

    A market holiday or a slow trading day.
  2. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  3. Dividend

    A distribution of a portion of a company's earnings, decided ...
  4. Einhorn Effect

    The sharp drop in a publicly traded company’s share price that ...
  5. Institutional Ownership

    The amount of a company’s available stock owned by mutual or ...
  6. Indicator

    Indicators are statistics used to measure current conditions ...

You May Also Like

Related Articles
  1. Chart Advisor

    How Investors are Profiting from Cyber ...

  2. Chart Advisor

    Buy These Stocks on The Pullback

  3. Technical Indicators

    Using Bullish Candlestick Patterns To ...

  4. Chart Advisor

    3 Ways To Trade Oil's Move Lower

  5. Trading Strategies

    Profitable Long-Term Consolidation Patterns

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!