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The other statements are true. If there is a reverse stock split, the market price per share will be increased and the number of outstanding shares will be reduced.
A reverse stock split does not directly impact a company's value (only its stock price). It can signal a company in distress since it raises the value of otherwise low-priced shares. Remaining relevant and avoiding being delisted are the most common reasons for corporations to pursue this strategy.
When a company completes a reverse stock split, each outstanding share of the company is converted into a fraction of a share. For example, if a company declares a one for ten reverse stock split, every ten shares that you own will be converted into a single share.
NOTE: A new CUSIP number is required for a reverse stock split prior to the Marketplace Effective Date. This information can be provided by selecting the box for section 2 above. Is there a cash out associated with this reverse stock split?
The holder of an option contract will have the same number of contracts at a reduced (1.33) strike price. The option contract now represents 133 shares per contract. A reverse split results in the reduction of outstanding shares and an increase in the price of the underlying security.
It's important to note, especially for new investors, that stock splits don't make a company's shares any better of a buy than prior to the split. Of course, the stock is then cheaper, but after a split the share of company ownership is less than pre-split.
Listing Rule 5250(b)(4) will require companies to provide public notice of a reverse split, using a Reg FD-compliant method, no later than p.m. ET at least two business days prior to the proposed market effective date.
Reverse stock splits work the same way as regular stock splits but in reverse. A reverse split takes multiple shares from investors and replaces them with fewer shares. The new share price is proportionally higher, leaving the total market value of the company unchanged.