Why Annaly Capital Management Stock Plunged as Much as 10% Today
Shares of the mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY) dropped as much as 10% on Sept. 26. The big news here hails all the way back to Sept. 8, when the company announced a reverse stock split. The market's reaction is not at all surprising.
For the most part, a reverse stock split is no more meaningful than a normal stock split. In both instances the number of shares a stockholder owns changes, but the actual percentage ownership of the company stays the same. In a reverse split, you just end up with fewer shares.
In this case, the reverse split was 1-for-4. Companies often do reverse splits because they need their share price to be higher than what it is to remain exchange traded, which wasn't the case here. However, there was another roughly similar reason here.
Source Fool.com
