Investing term

What is Stock split?

The company increases its share count by a fixed ratio while the per-share price drops by the same ratio.

A stock split increases the number of shares while cutting the per-share price by the same ratio, leaving total value unchanged — purely cosmetic. Companies split to make a high-priced share feel more accessible. It changes nothing fundamental about the business or your stake; a 2-for-1 split just turns one $100 share into two $50 shares.

For example

In a 4-for-1 split, one $400 share becomes four $100 shares — your total holding is identical, just sliced into more, cheaper pieces.

Stock split is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

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Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
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