What happens if shares reach zero

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Personal Finance. Your Practice. Popular Courses. Key Takeaways Supply and demand determine the value of a stock, with higher demand driving the price higher in turn. Lower demand causes a stock to lose some value—and plummeting demand could cause it to lose all value. In trading, a drop in stock value is a boon to investors who are trying to short a stock and a calamity to those who are holding long positions and hoping a stock price will rise.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Hold stocks for one year: hoping. The stock price can never go below zero. If a stock price falls to zero, you lose all of your investment in the company. However, stock prices don't usually fall to zero even if the company goes bankrupt.

The company still has some value. One example of a stock that has fallen to almost zero is Helios and Matheson Analytics. In reality, stock exchanges delist shares before they fall to zero. As a result, many companies with low stock prices go for a reverse stock split.

In a reverse stock split, the company lowers its outstanding shares by consolidating them. In June, Office Depot announced a reverse stock split. However, while a split itself doesn't affect the value of a stock, the circumstances surrounding the stock split, as well as the split-adjusted stock price, can certainly be a positive or negative catalyst.

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