Stock splits & reverse stock splits: how does a stock split affect indices?

The authorized capital and the total market value of the shares remain unchanged. A shareholder who owned one share with a market value of 120 euros before the split will own 10 shares worth 12 euros each after the stock split, which in turn corresponds to a market value of 120 euros. There is therefore no loss in the stock’s market value; rather, there is simply an adjustment based on the number of shares according to the stock split ratio (the index level and adjustment factor remain unchanged).

A reverse stock split is the opposite of a stock split. The corporation reduces the number of outstanding shares with the aim of increasing the stock price. The corporation’s share capital and the total value of the shares remain unchanged.

A shareholder who owned 100,000 shares with a market value of 1.20 euros before the split will, after the reverse stock split (ratio of 10:1), own 10,000 shares at 12 euros each, which in turn corresponds to a market value of 120,000 euros. Therefore, there is no loss in the stock’s market value; rather, there is only an adjustment based on the number of shares according to the stock split ratio (the share capital, the index level, and the adjustment factor remain unchanged).