What is a stock split?

Stock splits happen when a company decides to make the per share price of its stock more affordable to smaller investors. When this happens, existing shareholders receive more shares at a ratio determined by the company. For example, if a stock is split at a ratio of 1 for 2 and you hold 100 shares initially, you’ll own 200 shares afterwards. When stocks split, their value is split, too. If your shares were each worth $20 in the prior example, they’ll each be worth $10 after.