Glossary

A stock split is a corporate action taken by a company to increase the number of its outstanding shares by issuing more shares to current shareholders. 🪓

During a stock split, each shareholder receives additional shares based on a predetermined ratio, such as 2-for-1 or 3-for-1. The overall value of the shareholder's investment remains the same, but the stock's price per share decreases proportionally.

Example: In August 2020, Apple Inc. conducted a 4-for-1 stock split. Shareholders received three additional shares for every share they owned, and the stock price was divided by four.

Fun fact: Stock splits are often seen as a bullish 🐂 signal, as companies typically initiate them when they believe their share price has risen to a level that might be perceived as too expensive for smaller investors. A more affordable share price can attract a broader range of investors, increasing liquidity and demand.