Prompt: As a Chinese person, when seeing English financial news and information about actions of US listed companies, why are mergers and acquisitions written like this: NAOV reverse stock split: 1 for 10? Is this a unique English grammar that doesn’t conform to Chinese grammatical habits? Based on this, please explain the meaning of the stock split.

Hello! This is a very good question, and many investors who speak Chinese as their mother tongue will have the same confusion when first encountering English financial news. This is indeed a specific expression habit in English in the field of finance, which differs greatly from the order of Chinese grammar. I will explain the meaning of the stock split to you in detail.

Why is a 1 for 10 Reverse Stock Split Written as “1 for 10”?

Let’s break down this expression: A for B

Within this structure:

• A represents the new thing you will receive (the result).
• B represents the old thing you are giving up (the cost/exchange).
• The word “for” here means “in exchange for”.

Therefore, “1 for 10 reverse stock split” translates directly as: “1 new share for 10 old shares”.

In other words, your every 10 existing shares will be consolidated into 1 new share. This is precisely what the Chinese terms “10 combine with 1” or “10 shares merge into 1 share” mean.

Grammatical Habit Comparison

• English Convention (Result for Reason/Cost): Places “the result obtained” at the front and “the cost paid” at the back. For example, You get 1 new share for your 10 old shares. Headlines are often shortened to 1 for 10 for brevity.
• Chinese Convention (Reason/Cost -> Result): Tends to follow a chronological or logical order, stating “the original state” first, followed by “the resulting outcome.” For example, “(originally) 10 shares merged into (now) 1 share.”

Therefore, this isn’t a universal English grammar; it’s a very common convention and abbreviation used when expressing “exchange ratio” in business and finance. Illustrative Example (NAOV 1 for 10 Reverse Stock Split): Assume you hold 1000 shares of the NAOV company before a reverse stock split, with a share price of $0.5 per share.

• Total Asset Value: 1000 shares * $0.5/share = $500 USD After the reverse split (1 for 10):
• Number of Shares Held: 1000 shares / 10 = 100 shares
• Theoretical Share Price: $0.5/share * 10 = $5 per share
• Total Asset Value: 100 shares * $5/share = $500 USD

Conclusion: The primary purpose of the reverse stock split is to increase the price per share, which reduces the number of shares you hold, but (assuming no market fluctuations) your total asset value remains unchanged. Companies typically conduct reverse stock splits to meet exchange minimum price requirements (such as Nasdaq’s requirement for a share price to maintain above $1).

Stock Split Explanation

Once you understand consolidation, a stock split is easily understood. A stock split is the opposite of consolidation. English is typically written like this: 2 for 1 stock split or 3 for 1 stock split. Using the A for B structure we’ve learned above to interpret it: 2 for 1 stock split means: “You will receive 2 new shares in exchange for your 1 old share.” This is exactly what the Chinese phrase “1拆2” or “1股拆为2股” means.

Example (A Company’s 2 for 1 Stock Split):

Let’s assume that before the split, you hold 100 shares of a company with a stock price of $200 per share.

• Total Asset Value: 100 shares * $200/share = $20,000 After the split (2 for 1):
• Number of Shares Held: 100 shares * 2 = 200 shares
• Price Per Share (Theoretically): $200/share / 2 = $100 per share
• Total Asset Value: 200 shares * $100/share = $20,000

Conclusion: The purpose of a stock split is to lower the price per share, making it more attractive to small investors and increasing liquidity. It will increase your number of shares held, but equally so, your total asset value remains unchanged.

Summary

Summary

Summary

Hopefully, this explanation will help you better understand English financial news! It truly is a way of expression that requires a shift in mindset to get used to.