Did the SQQQ ETF Really Gain 400% A 1-for-5 reverse stock s...

Did the SQQQ ETF Really Gain 400%

A 1-for-5 reverse stock split is to blame for the SQQQ ETF’s seemingly high returns. In addition, the stock split became “effective prior to market open on January 13, 2022,” or this morning. This signifies that if an investor held five shares of SQQQ at yesterday’s close, the investor now owns one share as of this morning. Consequently, the price of the SQQQ ETF increased by five times.

However, the reverse stock split has no effect on SQQQ’s market capitalization. While the number of shares owned changes, the value of the shares does not. Furthermore, when reverse stock splits or stock splits occur, many financial sites often have a lag in data that makes it seem like the stock increased or decreased in price by massive percentages. These events often confuse many investors who are not up to date on the latest news.