A reverse stock split is a corporate action that consolidates existing shares into a smaller number of higher-priced shares, reducing the total share count while increasing the price per share proportionally without altering the company's overall market capitalization. While a reverse split is not inherently a negative operational event—frequently utilized simply to regain compliance with minimum stock exchange bid price requirements—it is often perceived negatively by market participants. Companies execute reverse splits because their stock prices have dropped significantly over time, signaling underlying financial distress, persistent operating losses, or a lack of sustained investor confidence.