stooocks.com

Understand any stock in simple English
Enter a ticker to learn what the company does and how it makes money.

Dictionary / The stock market

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.

Related terms

Market capWhat the whole company is worth on the market. StockA small piece of a company you can own. EPSThe profit one share earned. Stock exchangeThe market where shares are bought and sold. P/E ratioHow many years of profit you pay for in a share. DividendCash a company pays its owners.

See all terms β†’