The Key Difference Between Stock Split and Reverse Stock Split

Stock Split vs Reverse Stock Split
Feature	Stock Split	Reverse Stock Split
Definition	Corporate action that increases the number of shares by splitting existing ones into multiple units.	Corporate action that reduces the number of shares by combining existing ones into fewer units.
Objective	Make shares more affordable and increase liquidity.	Increase share price and maintain listing requirements.
Share Price Impact	Price per share decreases proportionally.	Price per share increases proportionally.
Shareholder Value	Total value of holding remains the same.	Total value of holding remains the same.
Number of Shares	Increases (e.g., 1 share becomes 2 in a 2-for-1 split).	Decreases (e.g., 10 shares become 1 in a 1-for-10 reverse split).
Market Perception	Generally seen as a positive sign of growth.	Often viewed as a negative signal, used to avoid delisting.
Liquidity	Usually increases due to more affordable share price.	May decrease due to higher share price and lower number of shares.
Example	A ₹1,000 share splits 2-for-1 into two ₹500 shares.	Ten ₹10 shares merge into one ₹100 share.
Impact on Ownership	Percentage ownership remains unchanged.	Percentage ownership remains unchanged.
Common Use	When share prices are high and company wants to make them accessible.	When share prices are too low and company wants to boost image or meet exchange rules.