Reverse stock split arbitrage (RSA)

This is how it works

A short video on earnings and RSA progress on a linked brokerage account.

What is a reverse stock split?

In a reverse stock split, the company combines shares so you hold fewer at a higher price per share. The ratio (for example, 1-for-25) sets how many old shares map to one new share. Before fees and taxes, your stake is usually intended to keep roughly the same value; fractions, settlement timing, and broker policy determine what hits your account.

Issuers often use reverse splits to satisfy exchange minimum price rules or to change how a low-priced stock appears on a quote. For regulator-focused background, see the SEC investor glossary on reverse stock splits.

How reverse stock split arbitrage works.

OneArbitrage automates a reverse-split workflow on your linked brokerage: hold 1 share, let the split settle, then exit when your account shows a round-up. Traders often call that pattern RSA (reverse stock split arbitrage). It applies when the issuer instructs brokers to round fractional shares up to 1 whole share. The walkthrough below uses one hypothetical 1-for-25 trade ($0.35 pre-split, no ticker).

1. 01

   Buy 1 Share

   You buy 1 share of a stock facing a 1-for-25 reverse split.

   Investment

   -$0.35

2. 02

   The Split Happens

   Your 1 share becomes a fraction when the split executes. A round-up (when the issuer allows it) turns that fraction into 1 full share. The quote moves to $8.75 ($0.35 × 25).

   Position

   1. 1 share
   2. Reverse split↓
      0.04 share
   3. Round up↓
      1 share
3. 03

   Sell For Profit

   After the round-up posts, you hold 1 full share. OneArbitrage sells it in your linked account to lock in the gain.

   Profit

   +$8.40

   2,400% return on 1 share

Why buy 1 share, not 1,000?

RSA profit comes when a tiny fraction after the split is rounded up to one full share at the new price. That happens on the leftover fraction, not on every share you owned before the split.

Same example: 1-for-25, $0.35 before the split, $8.75 after.

With 1,000 shares you end up with 40 whole shares ($350 in, about $350 out). There is no small fraction left to round up, so the bonus stays $0. The 2,400% in the walkthrough looks huge because you only put in $0.35 on one share, not because buying more shares multiplies the round-up.

Internal log examples (2024–2025)

A few profitable trades from our internal 2024 and 2025 RSA logs on a Robinhood personal account. Each row is 1 share before the split and the exit we logged afterward. Tickers are historical examples from that workbook.

In this sample, a bigger reverse-split ratio (for example 1-for-200 vs 1-for-10) usually means more dollars of profit when you only buy 1 share before the split, because your post-split fraction is smaller and a round-up can add more value. NXTT is the largest ratio here.