A stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur.
In a 9 to 10 stock split (a 'reverse' stock split as opposed to a 'forward' stock split), you have fewer shares, but at the time of the split, you still have the same paper value of those shares. I personally would be a bit wary of a company that is doing 'reverse' stock splits. (The ratio is in the company's favor, not your favor. I interpret that to mean that something is wrong within the company.)
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Scenario:
Say you have 10 shares in a company when the 9:10 stock split is declared and implemented. Now you have 9 shares. At the time of this reverse stock split, the paper value remains the same. Problem is ... what if the company does more of these reverse stock splits? If they do, pretty soon you might find yourself only owning 1 share. I tend to think it is a desperation or even a 'greed' measure for a company to do reverse stock splits.
On paper, it all looks fine. It would seem that your new one share still holds the same paper value as your prior 10 shares (still using my scenario), but that may not be what turns out to happen.
i want to know what do a 9 to 10 stock split do?
