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Stock Split

Stock splits increase the number of shares outstanding for a company. There is no change in equity or market value when a company splits its stock.
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A stock split is an increase in the number of shares of stock outstanding without any change in shareholder’s equity or market value for the company at the time of the split. As shares outstanding increase, each share’s value decreases proportionately, so there is no effect on the company’s total net value from a stock split.
For example, a two-for-one stock split would double the number of shares outstanding and give every shareholder two shares for every share owned, while reducing each share’s value by half.
Consider a shareholder with 1 share of XYZ stock worth $100. If company XYZ announces a two-for-one stock split, the shareholder would now have 2 shares of XYZ stock worth $50 per share for a total market value of $100.

Image of a 2 for 1 stock split