What is the reverse of a stock split called?

The reverse of a stock split is called a reverse stock split. It reduces the number of outstanding shares while proportionally increasing the price per share, leaving the company’s total market value broadly unchanged at the moment of the split.

For example, in a 1-for-10 reverse split, every 10 old shares become one new share. An investor who owned 1,000 shares would hold 100 afterward, while the quoted share price would theoretically become ten times higher. Fractional shares may be handled with cash payments or rounded according to the company’s plan.

Companies commonly use reverse splits to raise a very low share price, sometimes to meet a stock exchange’s continued-listing requirements. The transaction does not, by itself, improve a company’s finances or make investors richer. A forward, or ordinary, stock split does the opposite: it increases the share count and lowers the price per share. A reverse split can also be paired with a recapitalization or other corporate action, but the split alone changes share units rather than underlying business value.