A consolidation of outstanding shares (authorized and issued shares) that is carried out by a company to cut down the number of shares on the market. For example, in a one for two (1:2) reverse split, an investor who holds 500 shares of a company’s stock at $10 before a split down will receive 250 shares at $20 after the split. The result of a split down is fewer outstanding shares in a company and an increase in share price. Split downs are usually undertaken by a company to eliminate smaller shareholders (shareholders with small holdings).
It is also known as a reverse stock split (reverse split).
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