NeoMedia Technologies, Inc (NEOM)

[holding a lot]

Reverse Stock Split

Reverse stock split, or reverse split, is just the same but in reverse. It is the reduction in number of shares and an accompanying increase in the share price. The ratio is also reversed like 1-for-2, or 1-for-3.

Many institutional investors or mutual funds have rules against buying a stock whose value is below some least amount. A severe case would be when a share price has fallen so low that it is in danger of being delisted from its stock exchange. It is also possible that a reverse stock split could be used as a tactic to reduce the number of shareholders. In a hypothetical 1-for-100 reverse split any investor holding less than 100 shares would simply receive a cash payment and no shares of stock. If the resultant number of shareholders has then dropped under some threshold, it may be placed into a different regulatory category.