Understanding Stock Splits

Regular Stock Split

A regular stock split increases the number of shares while proportionally decreasing the share price.

• Example: In a 2:1 split, one share at $100 becomes two shares at $50 each
• Makes shares more affordable, potentially increasing liquidity
• Often seen as a positive sign of company growth

Reverse Stock Split

A reverse stock split decreases the number of shares while proportionally increasing the share price.

• Example: In a 1:2 split, two shares at $50 each become one share at $100
• Helps companies meet minimum share price requirements for stock exchanges
• Can make the stock more attractive to institutional investors

Note: Both types of splits don't change the total investment value or the company's market capitalization.