Stock Split

A stock split divides one share into several. Split a 1,000 share ten ways and each becomes 100. You hold ten times as many shares at a tenth of the price, so the company's value and your holding are unchanged.

Companies do it to make trading easier. When a single share costs thousands, small investors cannot participate. Lowering the price widens the pool of buyers and improves liquidity.

Prices sometimes rise after a split is announced, but that reflects easier access and renewed attention rather than the split itself. It also reads as a sign the business is doing well. No value has actually been created.

The reverse operation is a reverse split, merging several shares into one to lift the price. It is often used when a stock has fallen close to delisting thresholds, so unlike a split it is usually taken as a bad sign. Dividends and per-share figures are adjusted for the new share count as well, so when reading historical data check whether the prices are split-adjusted.