What is the difference between stock split vs reverse stock split?

The key difference between a stock split and a reverse stock split lies in their direction and the effect on share quantity and price. Here's a breakdown:

1. Stock Split:
   • A stock split is a corporate action where a company divides its existing shares into multiple shares, increasing the number of shares outstanding while decreasing the price per share. This is done to make the stock more accessible to a broader range of investors by reducing the price point, often to encourage trading and increase liquidity.
   • For example, a 2-for-1 split means each shareholder will receive one additional share for every two they hold, resulting in a lower share price but the same total investment value.
2. Reverse Stock Split:
   • A reverse stock split, on the other hand, reduces the number of outstanding shares by consolidating multiple shares into one, resulting in a higher price per share. This is often done to increase the share price to meet listing requirements or to appear more attractive to investors, although it does not change the company's market capitalization or total value.
   • For instance, a 1-for-5 reverse split means each shareholder will receive only one share for every five they held, leading to a higher share price but the same total investment value.

In summary, a stock split increases the share quantity and decreases the price per share, aiming to enhance liquidity and accessibility, whereas a reverse stock split decreases the share quantity and increases the price per share, often to address compliance issues or to signal a company's confidence in its stock price.