DEFINITION of 'Split Adjusted'

A modification made to a security's price that takes into consideration the effect of a split on the total number of shares or units outstanding, in order to compare the security's current price to its historical price in a consistent form of valuation. In order to adjust a security's price, the post split price would be multiplied by the split ratio (or ratios if multiple splits had occurred) in order to get a split-adjusted price.

While stock prices most often are referred to as split-adjusted, options on underlying split stocks are also split-adjusted by increasing the number of shares covered by the terms of the option. This conversion is done by the same split ratio as the underlying shares, and the strike price is divided by the split ratio.

BREAKING DOWN 'Split Adjusted'

If you own a stock that undergoes a stock split, it's imperative that you use the split-adjusted prices when calculating your return.

Consider a fictional company that traded for $20 a share in 1990. It has since undergone three 2-for-1 splits and now trades at $30. Although it may seem that the stock price has gone up 50%, it has actually appreciated by much more than that. One 1990 share would now be worth $240 because the original share is equivalent to eight current shares, each worth $30. This means that the stock has appreciated approximately 12 times. The 1990 split-adjusted share price would be $2.50 (20/8).

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  1. What Is a Split-Adjusted Share Price?

    Comparing split-adjusted share prices properly can help reflect accurate performance. Read Answer >>
  2. Does a stock split lead to the gapping up/down of the stock?

    If a company splits its stock, there will be no gapping of the stock due to the split itself. A stock split does not materially ... Read Answer >>
  3. Why are some shares priced in the hundreds or thousands of dollars, while other just ...

    The answer can be found in stock splits - or rather, a lack thereof. The vast majority of public companies opt to use stock ... Read Answer >>
  4. How do mutual funds split?

    Learn when mutual funds split their shares and why this practice is primarily a marketing tactic aimed at encouraging investors ... Read Answer >>
  5. What happens to the value of a mutual fund when a stock splits?

    Find out what happens to the value of a mutual fund when a stock in its portfolio splits, including how stock splits work ... Read Answer >>
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