Company A decides to do a reverse stock split and reduces the number of shares by, say 10 to 1.
Before the reverse split I only owned 7 Stocks on that company. How will this reverse stock split affect me? Will I now own only 0.7 shares, or what will happen with my shares?
You would end up with cash in your account with the value of 0.7 shares at the time of the reverse split. In other words, your shares would be forcibly sold.
Since forward and reverse splits are announced in advance, if you want to prevent your shares from being sold, you would need to buy 3 additional shares before the split so that you'd be left with 1 share after the split.
How your fractional shares are handled after a reverse split depends on the company and your broker.
Some companies give you nothing. Some companies round up to the nearest whole share. Most of the time, fractional shares are eliminated and you receive a payment-in-lieu for them (cash).
If your broker offers the ability to trade fractional shares then there's no problem. Some brokers will sell your soon to be fractional shares before the split.
