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Stock splits
What happens when a company I own shares in undergoes a stock split?
A stock split is when a company divides existing shares of its stock into multiple new shares, which reduces the stock price while increasing liquidity. Investors will receive additional shares in proportion to their shareholdings at the time of the stock split and the ratio of the split.
For example, if you hold 100 shares of a company that announces a 4:1 stock split, your 100 shares will become 400 shares. The total value of those shares will remain the same and the company will retain its market capitalisation.
There are several reasons for a company to conduct a stock split, such as more accessibility and renewed interest as the price per share drops. You can read more about stock splits here.
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