A stock split is a corporate action in which a company increases the number of outstanding shares of its stock by issuing more shares to its existing shareholders. For example, a company may issue two additional shares for every one share held in a 2-for-1 stock split.
Stock splits are usually carried out in order to make the stock more accessible and affordable to a wider range of investors. For example, if a stock is trading at a high price, a stock split can make it more affordable for smaller investors to buy shares.
When a company announces a stock split, the number of outstanding shares increases, but the value of the company does not change. For example, in a 2-for-1 stock split, shareholders would own twice as many shares as before, but the value of their holdings would be halved.
Stock splits do not typically have a material impact on the value of a company or the economic rights of shareholders. However, they may affect the market price of the stock in the short term. It is important to note that stock splits do not guarantee a profit or protect against loss. It is also a good idea to consult with a licensed financial advisor or to seek the advice of a financial professional before making any investment decisions.
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