Companies can perform a Stock Split to increase or decrease the number of shares they have in the market.
The result can be lowering share prices, making a company appear more affordable to smaller investors. Hence, this boosts the company's liquidity without affecting the market capitalization.
Similarly, when a corporation executes a Reverse Stock Split, the number of shares in the market will decrease, while the market value for each of those individual shares will increase.
How does it affect your shares?
The number of shares you own in the company decreases, though the value of each individual share will increase proportionally.
Remember, the overall value of the position always stays the same in a stock split.
A Split can occur with any ratio, however, the most common are; 2:1, 3:1, and 3:2
The ratio chosen depends on the price at which a company wants to trade on the exchange. Stock Splits and Reverse Stock Splits occur to all outstanding shares so there is no Stock Dilution. The company does not gain any value through a Stock Split.
What happens in the case of fractional shares?
Fractions don’t get split (reverse-split), yet. Fractional shares or remaining fractions will be sold at the last available price & the proceeds will be debited to your account.