Stock Split
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Definition of 'Stock Split'A corporate action in which a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same compared to pre-split amounts, because no real value has been added as a result of the split.In the U.K., a stock split is referred to as a "scrip issue," "bonus issue," "capitalization issue" or "free issue." |
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Investopedia explains 'Stock Split'For example, in a 2-for-1 split, each stockholder receives an additional share for each share he or she holds.One reason as to why stock splits are performed is that a company's share price has grown so high that to many investors, the shares are too expensive to buy in round lots. For example, if a XYZ Corp.'s shares were worth $1,000 each, investors would need to purchase $100,000 in order to own 100 shares. If each share was worth $10, investors would only need to pay $1,000 to own 100 shares. |
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What is a stock split? Why do stocks split?
All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision by the company's board of directors to increase the number of shares ... -
What is a split-adjusted share price?
If a company has undergone stock splits over its lifetime, comparing historical stock prices to those of the present day would not accurately reflect performance. For this reason, we must compare ... -
How do stock splits affect short sellers?
The simple answer to this question is that stock splits do not affect short sellers in a material way. There are some changes that occur as a result of a split that do affect the short position, ... -
If one of your stocks splits, doesn't that make it a better investment? If one of your stocks splits 2-1, wouldn't you then have twice as many shares? Wouldn't your share of the company's earnings then be twice as large?
Unfortunately, no. To understand why this is the case, let's review the mechanics of a stock split.Basically, companies choose to split their shares so they can lower the trading price of their ... -
What is the difference between redemption of shares and repurchase of shares?
Sometimes, shares of stock offered by a company are not regular, market-driven common shares. Instead, they may be preferred shares, which are considered fixed income securities and are issued ... -
What is the difference between a stock buyback and management buyout?
Each share of stock sold in the market represents partial ownership in the issuing company. If an individual or entity buys enough of these shares, they can take what's called a controlling interest ...
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