What Is a Stock Split?
A stock split cuts each share into several smaller shares. You get more shares, each at a lower price, but the total value you own stays the same.
What does a 10-for-1 stock split mean?
You own one share worth $1,000. After a 10-for-1 split, you own ten shares worth $100 each. Still $1,000 in total. It is like cutting a pizza into more slices: the pizza does not get bigger.
Why companies split their stock
When a share price gets very high, it can feel expensive to small investors, even though it is not. A lower price per share makes it easier to buy whole shares and to give shares to staff.
Is a stock split good for a stock?
It does not change what the company is worth. Its market cap, profit and business stay the same. Splits often happen after a stock has done very well, which is why they feel like good news. But the split itself creates no value.
Should I sell after a stock split?
A split alone is no reason to buy or sell. Judge the company the same way as before: what it sells, how it makes money, and what price you are paying.
Reverse stock split
The opposite also exists. In a 1-for-10 reverse split, ten shares become one. Companies with very low share prices sometimes do this to stay listed on an exchange. It is often a warning sign.
See it in real companies
Open a company to see what it sells and how it makes money.