Glossary · Defined term
Stock split
A stock split increases the share count while proportionally lowering the price per share; total market value is unchanged.
Last updated Oct 2, 2026
What it means
A stock split increases the number of shares outstanding while proportionally lowering the price per share; in a 2-for-1 split, every share becomes two shares at half the price. The company's total market value is unchanged, and each shareholder's stake is worth exactly what it was before, just divided into more pieces. Companies split their stock mainly to bring the per-share price into a range that feels accessible to smaller investors and employees. A reverse split does the opposite, consolidating shares to raise the per-share price, often to meet an exchange's minimum price requirement. Splits change the share count, not the economics of the business.
An example
For illustration, an investor owns 10 shares at $1,000 each, worth $10,000, and the company declares a 10-for-1 split. The investor now owns 100 shares at $100 each, still worth $10,000. Nothing about the company's value changed; the same pizza was simply cut into more slices.