A corporate action in which a corporation reduces the number of shares traded on the stock exchange is known as share consolidation. The term "reverse stock split" refers to the consolidation of shares.

Consolidation of shares occurs when a firm reduces the number of shares held by current shareholders.

Consider the following scenario:

If you possess 10,000 shares, a 5:1 share consolidation means that each of your five shares will be reduced to one. As a result, your 10,000 shares will be reduced to 2000.

When shares are consolidated, the number of shares issued decreases, but the price per share rises, preserving the value of your investment.
Note:

1. The valuation of the company is unaffected by consolidation.

3. A corporation will tell you through email before a stock consolidation, just like any other corporate activity.