Stock Split

What is Stock Split? — Definition

In a stock split, a company increases its share count by issuing additional shares to existing shareholders in proportion to their holdings. In a 2-for-1 split, every shareholder receives 2 shares for every 1 they held; the stock price is halved. Total market cap is unchanged. Companies typically split when their stock price becomes very high — making it inaccessible to smaller investors or simply improving trading liquidity.

A reverse stock split works the opposite way — reducing the share count and raising the per-share price. This is often done by struggling companies to avoid being delisted from exchanges that require minimum share prices.

Example

Apple has split its stock five times since going public. In August 2020, Apple executed a 4-for-1 split when shares were trading above $500. After the split, shares opened near $127. There was no fundamental change — same company, same value — but it made shares more accessible to retail investors.

Stock splits are tracked in BMInsider's Portfolio Tracker, which automatically adjusts cost basis and share counts when a split occurs, ensuring accurate performance reporting.