What is a stock split?

A stock split is when a company decides to divide its existing shares into multiple shares. A stock split does not change the value of a company, but it makes shares more liquid and more affordable for small investors. 

Stock splits often occur when a company believes its share prices have risen to levels that are too high or levels that do not match its peer companies. 

When stocks split, at first the price is reduced. For example, in a two-for-one split, stock prices would be cut in half - but an investor would now have two shares instead of one. Prices then often increase because shares are accessible to more investors. A stock split also signals to markets that a stock's price is rising, and could continue to climb.

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