Stock Split
A corporate action that divides existing shares into multiple new shares, lowering the price per share while keeping total market value unchanged.
What is Stock Split?
A stock split is a corporate action in which a company divides its existing shares into multiple new shares. In a 2-for-1 split, each shareholder receives two shares for every one held, and the share price is halved — but the total market capitalization remains unchanged. Companies split their stock to make shares more affordable and improve liquidity by broadening the pool of potential investors. A reverse stock split consolidates shares to increase price, often used to meet stock exchange minimum price requirements. Splits do not change the underlying value of the company.
Example
Apple (AAPL) conducted a 4-for-1 stock split on August 31, 2020. Shareholders received four shares for every one they held, and the price adjusted from approximately $500 to $125 per share. Apple had also split its stock in 2014 (7-for-1), 2005 (2-for-1), and twice in the 1980s.
Source: Apple Inc. — Investor Relations