Stock Split: What Does It Mean?

A stock split is when a company increases its total number of outstanding shares by issuing additional shares to existing shareholders in proportion to their holdings, while reducing the share price proportionally. For example, in a 2-for-1 split, an investor with 100 shares at $200 each ends up with 200 shares at $100 each — the total value remains the same. Companies split stocks to make shares more accessible to smaller investors and to increase market liquidity. Apple, Amazon, and Tesla have all executed notable stock splits. A reverse split works the opposite way, reducing share count and increasing price.