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What is Reverse Stock Split? And is it beneficial from a Shareholder's point of view?

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Hi Vishal, 

A Reverse Stock Split is a corporate action to decrease the number of outstanding shares in the market.  It doesn't affect the company's Market Capitalization and neither does the total value of the shares an investor holds change. 

 There could be various possible reasons for performing a Reverse Stock Split, such as preventing the company to get delisted, enhancing the company's image if over time it has degraded or the share prices have dropped. 

For an investor, it surely does allow them to trade with better liquidity. However, stock splits are a sign of a struggling firm. The value of the shares might go up after this action, but the investor might just think of it as nothing but an accounting gimmick. 

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