Editing Stock split (section)

{{Short description|Increasing the number of shares in a company, without dilution or change in total capitalization}}
{{refimprove|date=November 2007}}
{{Financial markets}}

A '''stock split''' or '''stock divide''' increases the number of [[Share capital|shares]] in a [[company]]. For example, after a 2-for-1 split, each investor will own double the number of shares, and each share will be worth half as much. 
A stock split causes a decrease of market price of individual shares, but does not change the total [[market capitalization]] of the company: [[stock dilution]] does not occur.<ref name="SECAnswers">{{cite web | url=https://www.sec.gov/answers/stocksplit.htm |title=Stock Splits |publisher=[[U.S. Securities and Exchange Commission]] |date=2010-03-29 |access-date=2014-06-05}}</ref>

A company may split its stock when the market price per share is so high that it becomes unwieldy when traded. One of the reasons is that a very high share price may deter small investors from buying the shares. Stock splits are usually initiated after a large run up in share price.<ref>{{Cite web |date=2023-11-24 |title=Why Do Companies Split Stocks? - ModernAgeBank |url=https://modernagebank.com/2023/11/24/why-do-companies-split-stocks/ |access-date=2023-11-27 |language=en-US}}</ref>