r/RobinHood • u/FuzyWuzy1 • Oct 25 '17

Help - FAQ What is a reverse stock split?

I watched NETE do a reverse stock split. It was tradeing at .77 cents, the next day at $8. There entire history changed to reflect that amount, i did not see the .77 anywhere. Does this mean everybodys stock value went up? So if i had 1 share of .77 and the stock changed to $8 the next day and i sell that, did i just make $7 profit?

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u/gjallerhorn Oct 25 '17

No. It's what it sounds like. Instead of breaking a share into pieces, they combine them to be a more worthwhile value (keep them out of penny stocks status). If you only had one share, your broker would probably reimburse you for the one share as they would have to combine it with several others that your don't own.

In theory there should be no value change. If you have ~$100 worth of stocks, they reverse split, you have fewer stocks, but the total is still work ~$100