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Stock split
What happens when a company I own shares in undergoes a stock split?
A stock split occurs when a company divides its existing shares into multiple new shares. While this reduces the price per share, it increases the number of shares in circulation – often improving liquidity.
If a company you hold shares in announces a stock split, you’ll receive additional shares based on your holdings at the time and the split ratio. For example, in a 4:1 stock split, 100 shares would become 400. The overall value of your investment stays the same, and the company’s market capitalisation remains unchanged. Alternatively, a company can also proceed with a reversed stock split where your holdings will decrease however the price per share will increase as per determined ratio.
Companies may carry out a stock split to make their shares more accessible or attract renewed interest by lowering the share price.
You can learn more about stock splits here.
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