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What is a stock split？

帮考网校2020-10-12 17:09:25

A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing more shares to its existing shareholders. The total value of the shares remains the same, but the number of shares outstanding increases, and the price per share decreases accordingly. For example, if a company has 1 million shares outstanding and decides to do a 2-for-1 stock split, it will issue an additional 1 million shares to its existing shareholders, resulting in a total of 2 million shares outstanding. The price per share will then be cut in half, making it more affordable for investors to purchase shares. Stock splits are usually done to make the stock more liquid and accessible to a wider range of investors.