A reverse stock split involves consolidating all shares into fewer parts. Since no capital is added, the nominal value of each share will increase because the denominator in the formula (nominal value = share capital/total number of shares issued) decreases. Although shareholders will own fewer shares after a reverse split, their relative ownership of the company remains unchanged. Similarly, although the nominal value of each share is higher (i.e., each share represents a larger portion of the total number of shares issued), the total value of a shareholder's shares remains the same.
The purpose of conducting a reverse stock split is usually to raise the price of each individual share in cases where the share price has become so low that it is no longer manageable. A reverse stock split does not affect the value of the company; it remains unchanged.