Stock Split

Stock Split
A corporate action in which a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same compared to pre-split amounts, because no real value has been added as a result of the split.

In the U.K., a stock split is referred to as a "scrip issue", "bonus issue", "capitalization issue" or "free issue".

For example, in a 2-for-1 split, each stockholder receives an additional share for each share he or she holds.

One reason as to why stock splits are performed is that a company's share price has grown so high that to many investors, the shares are too expensive to buy in round lots.

For example, if a XYZ Corp.'s shares were worth $1,000 each, investors would need to purchase $100,000 in order to own 100 shares. If each share was worth $10, investors would only need to pay $1,000 to own 100 shares.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • stock split — n: the division of the outstanding shares of a corporation into a larger number of shares thereby reducing the value of each share but not the total value of each holding compare reverse stock split ◇ The purpose of a stock split is to make the… …   Law dictionary

  • stock split — n. the act or result of splitting stock: see SPLIT (vt. 7) * * * …   Universalium

  • stock split — n. the act or result of splitting stock: see SPLIT (vt. 7) …   English World dictionary

  • Stock split — A stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur. Options and warrants are… …   Wikipedia

  • stock split — Occurs when a firm issues new shares of stock and in turn lowers the current market price of its stock to a level that is proportionate to pre split prices. For example, if IBM trades at $100 before a two for one split, after the split it will… …   Financial and business terms

  • Stock split — Occurs when a firm issues new shares of stock but in turn lowers the current market price of its stock to a level that is proportionate to pre split prices. For example, if IBM trades at $100 before a 2 for 1 split, after the split it will trade… …   Financial and business terms

  • stock split — noun an increase in the number of outstanding shares of a corporation without changing the shareholders equity they announced a two for one split of the common stock • Syn: ↑split, ↑split up • Hypernyms: ↑increase, ↑step up * * * stock split …   Useful english dictionary

  • stock split — noun Date: 1950 a division of corporate stock by the issuing to existing shareholders of a specified number of new shares with a corresponding lowering of par value for each outstanding share compare stock dividend …   New Collegiate Dictionary

  • stock split — See subdivision See also change in nominal value Increase in a corporation s number of outstanding equities without any change in the shareholder s equity or the aggregate market value at the time of the split. Equity price and nominal value are… …   Euroclear glossary

  • stock split — /ˈstɒk splɪt/ (say stok split) noun an issue of free ordinary shares in some proportion to existing shares …  

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