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.

comments powered by Disqus
Trading Center