Generally a company reduces its number of shares via a reverse split, where the share price is increased and the number of shares is decreased (netting the same company value).
The reason they do this is to make their stock more attractive to institutional investors (who have rules on which kind of stocks to invest in) or to stay in compliance with its stock exchange (ex. the NASDAQ's minimum share price rule).
Many traders believe there is a positive correlation between stock price and stability. This belief is not necessarily true, nevertheless it still is prevalent in the market.
Why would a company do this?
