What is a stock split? What are the implications to investors?
A stock split is an increase or decrease of a company’s outstanding shares without raising or reducing capital. Most stock splits are forward splits where the number of shares is increased. On the contrary, in a reverse split the number of shares is decreased after stock split. The primary purpose of forward stock split is to lower the stock price to allow more investors to buy this stock, and thus increasing liquidity. The company’s value will not change after a stock split, but the number of shares will change.
