How much should my position be after a 5-1 stock split. For ever 5 shares, I get 1 share.

My position before split:

500 shares of ABC with average price of $25.

ABC is trading at $9.  My position is worth $8000 ($12500 - $4500).

After the 5-1 split:

100 shares of ABC with avg price of ??

ABC is trading at $45.

What should my average price be?

I think it comes out to 100 @ $125?

  • 5
    Your position is worth $4500 before the split as well as after the split. – Victor May 21 '15 at 13:50
  • 1
    Is this a 5:1 split or 1:5 reverse split? The 500 @ 9 to 100 @ 45 makes it look like a reverse split; your position would be $4500 in both cases. Most stock trackers do not differentiate between these types, they're both split events. – user662852 May 21 '15 at 14:59
  • @NorgateData What are you talking about? This is absolutely a reverse split - It's a 1:5 split not a 5:1 split. OP gets 1 share for every 5 they owned, hence a 1 for 5 or 1:5 reverse split. After a reverse split, you always end up with fewer shares than you started with, but they're worth more. After a regular split, you end up with more shares that are worth less. Because each share split into multiple shares. – user91988 Aug 5 '20 at 17:09
  • Comment withdrawn - I must have misunderstood the OP's question. – Norgate Data Aug 5 '20 at 22:44

The average price would be $125 which would be used to compute your basis. You paid $12,500 for the stock that is now worth $4,500 which is a loss of $8,000 overall if you sell at this point.

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