If a company perceives that its stock price is too low it can go for a REVERSE SPLIT. It is usually done to prevent inexperienced traders with unrealistic expectations to invest in such shares. Shares which are trading at a very low price are technically called PENNY STOCKS. A company in such a situation will reduce the number of shares outstanding causing a corresponding increase in its share prices keeping the issued capital same as before reverse split.
Jan 02 2014 06:50 PM