tesla is a good example of a company that did this at ipo. really, there are no financial implications. the valuation of the company stays the same with a spli

tesla is a good example of a company that did this at ipo. really, there are no financial implications. the valuation of the company stays the same with a split, but the price of the stock changes proportionate to the quantity outstanding. valuation = # shares * $ per share what the reverse split does (or split - as twilio did a 2:1 split just over a year ago) is put the cost per share in a range that appears more attractive to buyers. in today's market, that is ~$15 +/-5. so if the internal valuation pre-IPO has the stock at $8, the company often reverse splits 1:2 and then you have an initial price back at $16. that way you don't look like a penny stock going out the door.