Definition
A stock split increases the number of shares outstanding by issuing additional shares to existing shareholders proportionally. In a 2-for-1 split, shareholders receive one additional share for each share owned, and the price halves. Total market value remains unchanged. Companies split stocks to improve liquidity and make shares more accessible to retail investors. Reverse splits (consolidating shares) are used when prices are too low. Splits don't affect company fundamentals but can impact trading psychology.
Formula
Example
You own 100 shares of a $300 stock. After a 3-for-1 split, you own 300 shares at $100 each. Total value remains $30,000, but the lower price may attract more retail investors.
FAQ
What is Stock Split?
A corporate action increasing shares outstanding while proportionally reducing the share price.
How do you calculate Stock Split?
A common formula for Stock Split is: 新股数 = 原股数 x 拆分比例; 新股价 = 原股价 / 拆分比例
Why is Stock Split important?
Stock Split helps investors evaluate corporate actions and make more informed decisions.