Why would a company do a reverse stock split
A reverse stock split is one such corporate action through which existing shares of corporate stock are effectively merged to create a smaller number of proportionally more valuable shares. Since companies don’t create any value by decreasing the number of shares, the price per share increases proportionally. A reverse stock split is a management decision in which a company reduces the total number of its outstanding shares, increases the price, and increases the face value of the stock. It is the total opposite of Forward Stock Split. A reverse stock split involves the company merging its current outstanding shares in a pre-defined ratio.