A type of corporate action, share consolidation is when a company decreases the number of shares trading in the stock exchange. This action is also known as “reverse stock split.”
A company carries out consolidation of shares by decreasing the number of shares held by the current shareholders. For instance, if you hold 2000 shares, a share consolidation of 4:1 i.e., every 4 shares you own will be reduced to 1. So your 2000 shares will be brought down to 500 shares.
When shares get consolidated, their quantity takes a dive but the price per share surges. So the overall investment that you made essentially remains the same.
Please note that the valuation of the company gets modified when consolidation occurs after reduction of capital.
The company will notify you beforehand via email if a stock consolidation is about to happen.