The Effect Of AIG’s Reverse Stock Split

The approval of a 1:20 reverse stock split is bringing AIG back into the headlines. The stock appears to be up 1,500 percent today. Don’t get excited, a reverse stock split took effect yesterday at 5 pm. What is a reverse stock split and should it mean anything to investors?
As an investor, a stock split or a reverse stock split does nothing for your overall position. Let’s take a look at both.
In a normal stock split, the number of outstanding shares is increased, typically by a 2:1 ratio. So, for every one share you owned prior to the split, you will own two after the split. …read more