Reverse Stock Split Calculator
This simulator demonstrates how a reverse stock split changes the number of outstanding shares and the theoretical share price while keeping market capitalization approximately invariant. Use it to estimate how your holdings, fractional shares and cost basis are affected by a specified split ratio.
The tool offers a standard model and a cash‑out model for fractional shares. Inputs include current shares, current price, the split ratio (old shares per new share) and an optional cash‑out price for fractional shares.
Governance
Record 2a7131f5ef19 • Reviewed by Fidamen Standards Committee
Models broker behaviour that cashes out fractional new shares. Requires a cash‑out price (often the post‑split market price); shows cash‑out value and rounded issued shares.
Inputs
Results
Issued whole new shares (rounded down)
—
Fractional new shares
—
Cash‑out for fractional shares
—
Post‑split theoretical price
$25.00
Post‑split market capitalization (theoretical)
$2,500.00
Approximate cost basis per new share
$10.00
| Output | Value | Unit |
|---|---|---|
| Issued whole new shares (rounded down) | — | shares |
| Fractional new shares | — | shares |
| Cash‑out for fractional shares | — | USD |
| Post‑split theoretical price | $25.00 | USD |
| Post‑split market capitalization (theoretical) | $2,500.00 | USD |
| Approximate cost basis per new share | $10.00 | USD |
Visualization
Methodology
The calculation treats a reverse split as a multiplicative factor equal to old_shares_per_new_share divided by new_shares (commonly 10:1, expressed as factor = 10). Post‑split price is computed by multiplying the pre‑split price by the factor, and post‑split share count is divided by the same factor so that market capitalization remains constant in theoretical terms.
Fractional shares arise when the post‑split share count is not an integer. Brokers handle these in different ways: cash‑out at a specified price, rounding down (forfeiting fractions), rounding up (issuing an extra share), or issuing fractional shares if supported. This tool models the cash‑out scenario explicitly and provides approximate cost‑basis conversion by multiplying the per‑share basis by the split factor.
Worked examples
Example: 1,000 shares at $2.50 with a 1‑for‑10 reverse split (factor = 10). Post‑split shares = 1000 / 10 = 100. Post‑split price = $2.50 * 10 = $25.00. Market cap remains $2,500.
If the post‑split shares calculation results in a fractional amount (e.g., 101.3 new shares), a broker may cash out 0.3 shares. At a cash‑out price of $25.00 the cash‑out value would be $7.50.
F.A.Q.
Will market capitalization change after a reverse split?
Theoretical market capitalization remains the same because share count decreases while price increases by the same factor. In practice small differences can arise from market movements, rounding, cash‑out amounts, and transaction fees.
How are fractional shares handled?
Broker policies vary. Common treatments are cash‑out of fractional shares, rounding down to the nearest whole share, rounding up, or issuing fractional shares when supported. Use the cash‑out option to model the cash payment you would receive for fractions.
Does a reverse split change the total cost basis of my position?
Total cost basis of your entire holding should remain constant absent cash‑out events. Per‑share cost basis is adjusted by the split factor; when fractional shares are cashed out you may need to allocate a portion of your total basis to the cash‑out amount for tax reporting. Consult a tax advisor for exact allocation rules.
Is the cash‑out price always the post‑split market price?
Not always. Brokers or the company may specify a cash‑out method or price; some use the market close price, others use a calculation. Enter the price your broker or company uses into the cash‑out price field to model the exact payout.
How accurate are these computations?
This tool provides theoretical and planning‑level estimates. It follows arithmetic rules for splits and rounding but does not model market microstructure, fees, taxes, or broker‑specific rounding/settlement nuances. See accuracy caveats and standards references below.
Sources & citations
- NIST — National Institute of Standards and Technology — https://www.nist.gov
- ISO — International Organization for Standardization — https://www.iso.org
- IEEE Standards — https://standards.ieee.org
- OSHA — Occupational Safety and Health Administration — https://www.osha.gov
- SEC — U.S. Securities and Exchange Commission — https://www.sec.gov
- IRS — U.S. Internal Revenue Service (tax treatment guidance) — https://www.irs.gov
- SEC — Investor.gov Educational Resources — https://www.investor.gov/
- CFA Institute — Global Investment Performance Standards (GIPS) — https://rpc.cfainstitute.org/gips-standards
- FINRA — Investment Products — https://www.finra.org/investors/investing/investment-products
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 2a7131f5ef19What changed (latest)
v1.0.0 • 2025-11-08 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-08 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 8, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-08 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: f70c0a393e8f