Reverse Split

A reverse split merges multiple shares into one, multiplying the price while leaving each holder's dollar value unchanged: in a 1-for-10, 1,000 shares at $0.40 become 100 shares at $4.00. Same $400, fewer shares, higher print.

The usual motive is survival, not optics. Nasdaq and NYSE delist stocks that fail to hold a $1.00 minimum bid price, and a reverse split is the standard cure — which is why the market reads the announcement as an admission that the price is not coming back on its own. Studies and trader experience agree on the pattern: most reverse-split stocks resume falling afterward.

There are respectable exceptions — post-restructuring companies and closing legs of mergers use reverse splits as housekeeping — but a cash-burning micro cap doing a 1-for-20 to regain compliance is the base case, and dilutive offerings often follow once the price is presentable again.