yunginTL

I have a few restricted shares of xyz, if the stock reverse splits, what does that mean for my restricted shares?

What does it mean for say $1000 worth of 100 regular shares?

mrdeeno

depends on what the reverse split is...

$1000 worth of 100 shares means $10 per share. A regular split of 2 for 1 means for every one share, you get 2...so in this case after a split, you would have 200 shares at $5 each (same total...$1000).

A reverse split is a recombination...for example a 1 for 2 reverse split means you get 1 share for every 2... so you'd have 50 shares but each one would then be worth $20 (again, $1000 total).

Restricted may mean many things, but usually means you have to hold them for a certain amount of time before you sell.

They are separate issues, so they can still be restricted and not be affected by a reverse split.

yunginTL

yea my restriction on the stock is that i can only cash in after a certain period of time, in that case, does that mean a reverse split raises the value of my restricted stock? since it isn't affected by the reverse split, but the PPS is alot higher?

mrdeeno

A reverse or regular split does nothing to the total value of of your holdings.

The price per share is higher in a reverse split, but you have less shares...so your total value is still the same.

Again, 100 shares at $10 = $1000 total value.

If it reverse 2 for 1, you have 50 shares at $20 = $1000 total value.

The total value of your holdings has not changed...you still have $1000 in stock. Even if it reverses 100 for 1, you'd end up with 1 share worth $1000...the value has NOT changed because you still only have $1000.

Technically, the price per share has increased, but that's not the way you should be looking at it.

yunginTL

so what does a reverse split mean to a restricted share, when the time comes for you to redeem the share, since it isn't affected by the reverse split? you would be able to sell at market price correct? and market price would be higher because of the reverse split, and since you're restricted shares aren't affected by the RS, wouldn't it increase the value of ur holdings? It's a confusin concept to grasp really... haha thanks for the help though, i feel like a dumbass

mrdeeno

Again, no, a stock can do a reverse split whether its restricted or not restricted...there's no difference. A stock can be restricted, whether it splits or not...there's no difference.

this doesn't mean a split doesn't affect your shares...it just means that it has the same affect on restricted or unrestricted...it doesn't give a shit either way.

Let's say you have 100 shares @ $10/share. They are restricted until Dec. 25 2006. To make it simple, let's say that there was no change in market value (ie stays at $10/share). On Dec. 25, they are no longer restricted so you can sell 100 shares for $10/share = $1000 in your pocket.

Let's say you have 100 shares @ $10/share. They are restricted until Dec. 25 2006. Again, let's say that there is no change in market value (stays at $10/share). Let's say in November 25, the stock does a reverse split (2 for 1). Due to that, you now have 50 shares @ $20/share on Nov. 25. They are still restricted until Dec. 25. The reverse split applies to ALL shares, not just yours, so the market value per share is now $20/share...technically no change since half of the shares in existance are now gone. On Dec. 25, you can sell your shares...but you only have 50 shares @ $20. Again, you only pocket $1000.

Again, the split doesn't care whether the stock is restricted or not. And the restriction doesn't care whether the stock splits or not.

When I said they are restricted and not affected by the split, it may have been misleading. I mean tto say that the "restriction" is not affected by the split...but the stocks still go through the split.