Help! Reverse Split, Lost Shares!?

Question

The company I invested in just went through a $200 reverse split and a large amount of my shares (49,750) are missing from my account! I only have 250 left! What does this mean? I contacted my broker and they told me they would call me when they get more info from the company. Are my shares gone forever?

Answer 1

It sounds like the company did a 199 to 1 reverse splits and now your own 250 shares of the company. Although the stock price may be a little higher, you still lost money and now you have to calculate how much you bought the shares at, which is generally a high cost.

Again, you still have 250 shares, so they're still there, unless the company goes into bankruptcy.

Answer 2

With a reverse split, you end up with fewer shares.

With a 2 for 1 regular split, you start off with 100 shares and end up with 200, but the price per share is halved.

The reverse split is the opposite.

You start off with 100 and you end up with 50.

But not all splits are 1 to 2. Make sure the percentages offered are what your records show. There can be 3 to 1 reverse splits, for instance.

One quick and easy way to more or less tell is you got cheated: Multiply the share price by the number of shares you have. Those values should be more or less equal on both sides of the split. The split itself shouldn't change the dollar value of your total investment, although understand that there must be a bit of wiggle room since shares change in value throughout the trading day.

Understand that a reverse split is not generally a good indication about a company. Companies do this when their stock price has been going down and they want to suddenly increase the value of each share. For instance, companies don't like the value of their stock to be below ten dollars. And certainly not below a buck.

Answer 3

Instead of a "$200" reverse split it appears it was a "1 for 200" reverse split. That means every 200 shares before the split became 1 share after the reverse split. Since 50,000 divided by 200 is 250, you now own 250 shares. The good news is that you still own the same perentage of the company, so the value of your investment did not decrease due to the split. (Each of the new shares immediately after the reverse split should have been worth 200 times what each of the old shares was worth immediately before the reverse split.)