Reverse/Forward Stock Split

AAA

DEFINITION of 'Reverse/Forward Stock Split'

A stock split strategy that includes the use of a reverse stock split followed by a forward stock split. A reverse/forward stock split is usually used by companies to cash out shareholders with a less-than-certain amount of shares. This is believed to cut administrative costs by reducing the number of shareholders who require mailed proxies and other documents.

INVESTOPEDIA EXPLAINS 'Reverse/Forward Stock Split'

For example, if a company declares a reverse/forward stock split, it could start by exchanging one share for 100 shares that the investor holds. Investors with fewer than 100 shares would not be able to do the split and would therefore be cashed out. The company would then do a forward stock split for 100 for 1, which will bring shareholders that were not cashed out to their original number of shares.

RELATED TERMS
  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. Common Stock Equivalent

    Securities such as stock options, warrants, preferred bonds, ...
  4. Market Share

    The percentage of an industry or market's total sales that is ...
  5. Composite

    A grouping of equities, indexes or other factors combined in ...
  6. Fractional Share

    A share of equity that is less than one full share. Fractional ...
Related Articles
  1. The Power Of Dividend Growth
    Investing Basics

    The Power Of Dividend Growth

  2. Understanding Stock Splits
    Investing Basics

    Understanding Stock Splits

  3. How Now, Dow? What Moves The DJIA?
    Bonds & Fixed Income

    How Now, Dow? What Moves The DJIA?

  4. Introduction to Types of Trading: Fundamental ...
    Trading Strategies

    Introduction to Types of Trading: Fundamental ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center