What does Stock Split mean?

A stock split divides each existing share into multiple shares, lowering the price per share without changing what the company is actually worth.

In a 2-for-1 stock split, every share you own becomes two, and the price per share is cut in half — your total investment value doesn't change. Companies split shares mainly to make the price look more accessible to smaller investors; it has no effect on the company's underlying value.

Stock Split example

In a 4-for-1 split, one $400 share becomes four $100 shares. Own 10 shares worth $4,000 before and you own 40 shares worth $4,000 after — nothing about your stake or the company changes.

Common beginner mistake

Buying because a split makes the stock look cheaper. The value per share drops by exactly the split ratio; the business is the same size.