Reverse Stock Splits Hit Record High Amid Small-Cap Struggles

The number of reverse stock splits has surged to a record high this year, reflecting financial strain on small-cap companies. While technology giants soar, small firms are facing challenges in maintaining their listings. Nearly 80% of these firms had a market cap under $250 million, indicating financial stress.

Reverse stock splits have reached a record high worldwide this year, highlighting the pressures on small-cap companies. These firms struggle to stay listed, even as tech industry giants soar to new heights fueled by AI-related growth.

Research from Wall Street Horizon reveals that 288 reverse splits were performed by October's end, contrasting sharply with just 53 traditional splits. A Reuters analysis indicates that about 80% of these companies had a market cap below $250 million.

Reverse splits, typically seen as indicators of financial distress, consolidate shares to meet exchange requirements. The trend underscores a market divide, with small caps striving to maintain their stock value while megacaps benefit from AI and tech-driven rallies.

(With inputs from agencies.)