I had 800 shares with ETRM now they give you one share for every 70 you have that leaves me with 11 shares how is this right? Can anyone explain to me how this works? I realize it s a risky game with the stock market but I didn t think a company could basically just take I mean literally take your money! In advance
I had 800 shares with ETRM now they give you one share for every 70 you have that leaves me with 11 shares how is this right? Can anyone explain to me how this works? I realize it s a risky game with the stock market but I didn t think a company could basically just take I mean literally take your money! In advance thanks to all who answer!
Bailey: A stock split is like getting change for currency bills.
If your stock splits 2 for 1, it is like getting two five dollar bills for a ten. Stock is the same. A $100 stock split 2 for 1 takes your $100 share and gives you two $50 shares.
►You don't gain or lose anything.
A reverse split 2 for 1 is like getting a ten for two fives. With stock it is the same, trading two shares for one that is worth twice as much.
A stock can split to any degree such as 2 for 1, 10 for 1, 1 for 10, or 1 for 70.
(As answerer "Max Hoopla" mentioned, you will receive cash for your partial share.)
A reverse split is done for a couple of reasons. There may be too many outstanding shares on the market and the company may want to reduce that number. A company may also be afraid that the Stock Market can de-list their stock because the value has dropped too low (usually under the minimum of $1). That is probably what happened to you. The stock got too cheap. You still have the same investment in the company, but now you have less shares(fractional shares are usually paid as cash to you).
If you do the math the 11 shares you have now are worth as much as the 800 you had before (they might have given you back a few dollars if the conversion wasn't clean.) Stock splits and reverse stock splits don't affect your share of the pie directly, they just affect how many pieces its cut up into.
Each individual new share is worth 70 times one of the old shares. The total value doesn't change.
You will get cash for your partial share.