Connect With Us
Register
Login
Stock split definition
A stock split is a corporate action that increases a company's share count by dividing each existing share into several, while lowering the share price in the same proportion. The total value of the company, and of your holding, stays the same.
The company sets a ratio, such as 4-for-1 or 2-for-1, and every shareholder receives the extra shares automatically. Market capitalisation does not change, because the lower price exactly offsets the higher share count. Companies usually split to bring a high share price down to a more accessible level, which can widen the pool of potential buyers and improve liquidity.
A stock split is the opposite of a reverse split. A reverse split consolidates shares, for example turning ten shares into one and raising the price tenfold, often to lift a low price back above an exchange's minimum. Neither action changes the underlying value of what you own; both only change the number of shares and the price per share.
Stock split Example
You hold 1 share priced at USD 100 when the company runs a 4-for-1 stock split. Your single share becomes four, and the price divides by four:
USD 100 √∑ 4 = USD 25
You now hold 4 shares at USD 25 each. Your total value is unchanged:
4 √ó USD 25 = USD 100
Get Started!
Sign up and access the Global Markets in less than 3 minutes
The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
TMGM is authorized and regulated in various jurisdictions.
Trademax Australia Limited, trading as TMGM, is regulated by the Australian Securities and Investments Commission (ASIC), AFSL no. 436416 and is located at Level 28, One International Tower, 100 Barangaroo Avenue, 2000 Sydney, NSW Australia.
Email: support@tmgm.com.au
Trademax Global Limited, trading as TMGM, is authorized and regulated by the Vanuatu Financial Services Commission (VFSC), registration number 40356 and registered at 1276, Kumul Highway, Port Vila, Vanuatu, Republic of Vanuatu.
Email: support@tmgm.com
Trademax Global Markets (SE) Limited, trading as TMGM, is authorized and regulated by the Financial Services Authority (FSA) of Seychelles, with license number SD224. The company is registered at Office No 13, Providence Estate ABIS Centre, Mahe, Seychelles.
Email: support@tmgm.com
Trademax Global Markets (International) Pty Ltd, trading as TMGM, is authorized and regulated by the Financial Services Commission, Mauritius (FSC) with license no. GB22201012, and registered at 33, Edith Cavell Street C/o IQ EQ Fund Services (Mauritius) Ltd Port Louis, 11324 Mauritius.
Email: support@tmgm.com
Copyright © TMGM. All rights reserved