Stock Split Calculator

Calculate the Impact of Stock Splits on Your Investments.

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What is a Stock Split?

A stock split is a corporate action where a company increases the number of its outstanding shares while decreasing the share price proportionately. The overall market capitalization of the company remains the same, but shareholders end up with more shares at a lower price. Stock splits are often executed to make shares more affordable and attractive to investors.

How Does a Stock Split Work?

During a stock split, the company decides on a ratio, such as 2:1 or 3:2, which determines how many new shares a shareholder will receive for each existing share. For example, in a 2:1 split, each shareholder would receive two shares for every one share they own. While the number of shares doubles, the share price halves, keeping the overall investment value unchanged.

Stock Split Calculation Formula

To calculate the new stock price and number of shares after a split, use the following formulas:

  • New Stock Price:

    New Price = Current Price × (Old Shares Ratio / New Shares Ratio)

  • New Number of Shares:

    New Shares = Existing Shares × (New Shares Ratio / Old Shares Ratio)

For example, in a 3:2 stock split where the current price is $150 and you own 200 shares:

  • New Stock Price: $150 × (2 / 3) = $100
  • New Number of Shares: 200 × (3 / 2) = 300 shares

Benefits of Stock Splits

Stock splits can offer several benefits:

  • Increased Liquidity: More shares at a lower price can lead to higher trading volumes and improved liquidity.
  • Greater Accessibility: Lower share prices make the stock more affordable for a wider range of investors.
  • Positive Market Perception: Stock splits are often seen as a sign of a company's growth and success, potentially boosting investor confidence.

Types of Stock Splits

There are two main types of stock splits:

  • Forward Stock Split: This is the most common type, where the number of shares increases, and the price per share decreases proportionately (e.g., 2:1, 3:2).
  • Reverse Stock Split: In a reverse split, the number of shares decreases, and the price per share increases. This is often done to avoid delisting from stock exchanges.

Stock Split Calculator

Use our Stock Split Calculator to quickly determine the impact of a stock split on your holdings. Simply enter the current stock price, the stock split ratio, and the number of shares you own to see the new stock price, the additional shares you'll receive, and the total value of your investment after the split.

Why Do Companies Perform Stock Splits?

Companies often perform stock splits for several reasons:

  • To Increase Share Affordability: By lowering the share price, companies make their stock more accessible to a larger pool of investors.
  • To Signal Growth: A stock split can be a positive signal that the company is growing and expects future price appreciation.
  • To Enhance Liquidity: More shares at a lower price often result in higher trading volumes, improving liquidity in the market.

Historical Examples of Major Stock Splits

Some of the most famous stock splits in history include:

  • Apple (AAPL): Apple has performed multiple stock splits, including a 4:1 split in 2020 to make shares more affordable for a broader range of investors.
  • Tesla (TSLA): Tesla executed a 5:1 stock split in 2020, which resulted in a significant surge in its share price afterward.

Stock Split FAQ

Does a stock split affect the value of my investment?

No, a stock split does not change the overall value of your investment. You will have more shares, but the share price will decrease proportionately.

Do I need to do anything when a stock I own splits?

No, the split is automatically reflected in your brokerage account.

Can stock splits affect stock prices in the long run?

While stock splits do not directly affect the value, they can lead to increased demand and trading activity, which may influence the stock price over time.

Stock splits are a valuable tool for companies looking to make their shares more accessible and attractive to a broader audience. Understanding the mechanics and implications of stock splits can help you make more informed investment decisions. Use our Stock Split Calculator to see how a split could impact your holdings.