A reverse stock split is a corporate action where a company reduces the number of its outstanding shares while increasing the share price proportionally. For example, in a 1-for-10 reverse split, shareholders would receive one new share for every ten shares they owned, resulting in a higher price per share but the same overall value of their investment. Companies often implement reverse stock splits to meet minimum share price requirements set by stock exchanges or to improve their market perception. This action does not change the overall market capitalization of the company, as the total value of shares remains the same despite the reduced number of shares.