What Is a Reverse Stock Split, and How Does It Change Your Portfolio?

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What Is a Reverse Stock Split, and How Does It Change Your Portfolio?

What does it mean for investors when a company announces a reverse stock split? If you're familiar with stock trading, then you've likely heard of a forward stock split, which is a process that can leave investors holding more shares than they did before without having to make a purchase of more stocks. A reverse stock split is essentially the opposite and happens when a company decides to consolidate the number of shares it has available on the market.

But is a reverse stock split good news or bad news for your finances, and what exactly does it mean for your portfolio? Take a closer look into why companies perform these consolidations and how these actions affect investors.