A stock split is a corporate action in which a company divides its existing shares into multiple new shares, proportionally reducing the price per share while keeping the total market capitalization unchanged. Companies typically perform stock splits to make their shares more accessible to a wider range of investors by lowering the per-share price. A stock split does not change the overall value of an investor's holdings.

Forward splits, such as 2-for-1 or 4-for-1, increase the number of shares while decreasing the price proportionally. Reverse splits, such as 1-for-5, reduce the number of shares and increase the price per share. Reverse splits are sometimes used by companies to meet minimum listing requirements on stock exchanges.

When evaluating a stock split, it is important to understand that the fundamental value of the company does not change. Earnings per share, dividend payments, and other per-share metrics are adjusted accordingly after the split. The total value before and after a split should always be equal, which this calculator confirms for you.

Formula

New Shares = Current Shares x (Split Numerator / Split Denominator)

New Price = Current Price / (Split Numerator / Split Denominator)

Example

If you own 100 shares at $500 each and a 4-for-1 split is announced, your new share count is 100 x (4/1) = 400 shares. The new price per share is $500 / (4/1) = $125. Your total value before the split was 100 x $500 = $50,000, and after the split it is 400 x $125 = $50,000.