What does it mean specifically when a stock makes a 1 for 10 split?

Question

I know that it means, for instance, if you have 1000 shares, you will now have 100, leaving you with a whole lot less money than you had, but does that usually spell trouble for the future of this stock or is there still a chance that the stock price will go up and you will have a chance of getting some of your money back. Are there sometimes legitimate reasons for a stock doing this. I suppose it depends on many factors. This may be a difficult one to answer, just a general reply would be great. I'm thinking about taking what's left and running with it, perhaps investing in a better stock with better potential for profit to recoup some of my money. Any advice, anyone?

Answer 1

in very plain language, a regular split makes your stocks price go down but you get more stock.

A reverse split makes the price go up but you have less stock now.

I have made darn good money due to split of both kinds. I do not worry, wring my hangs and then lose control and sell. I sit on my stock for longer periods of time than others do AND when I find a company that just did a reg. split, I buy buy buy at that new low price.

Of course if a company is doing crappy over all I would not buy into it but I do my homework.

If you take your money and run with it you might be sorry... but then again you might not... that's the glorious thing about the market, YOU get to decide !!

I wish you the best choice !!

: )

Answer 2

In theory, a stock split will not make you lose money. In the example that you're giving, the stock is attempting to prop up it's value by lower the number of shares outstanding. This could be manuveurs towards being bought by another company, it could be an enterprise decision that the current value was too low.

Are the dividends associated with this? If so, has that amount changed?

good luck

Answer 3

More often than not a reverse split is done to get (or keep) the price of the stock above the minimum price for listing on an exchange. In my personal experience a reverse split is never good, but I suppose you never know.