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Why did my number of shares of stock decrease?

Personal Finance & Money Asked on March 7, 2021

I bought 24242 shares for $0.16 each in Dec 2015. Today I logged into my brokerage account and saw that the share price has gone down to $.055 and I now only own 1358 shares.

To my understanding, even though the stock price went down I should still own my 24242 shares, right? Or is it the case that if a company’s stock price goes down stockholders lose shares in the company?

One Answer

During a stock split the only thing that changes is the number of shares outstanding. Typically a stock splits to lower its price per share. Sometimes if a company's value is falling it will do a reverse split where X shares will be exchanged for Y shares. This is typically done to avoid being de-listed from an exchange if the price per share falls below a certain threshold, usually $1. Again the only thing changing is the number of shares outstanding. A 1 for 20 reverse split means for every 20 shares outstanding the shareholder will be granted one new share.

Example X Co. has 1,000,000 shares outstanding for a price of $100 per share. It does a 10 for 1 split. Now there are 10,000,000 shares outstanding for a price of $10 per share.

Example Y Co has 1,000,000 shares outstanding for a price of $1 per share. It does a 1 for 10 reverse split. Now there are 100,000 shares outstanding for a price of $10.

Quickly looking at the news for ASTI it looks like it underwent a 1 for 20 reverse split. You should probably look at your statements and ask your broker how the arithmetic worked in your case.

Investopedia links for Reverse Stock Split and Stock Split

Answered by quid on March 7, 2021

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