A stock split happens when a company divides its existing shares into multiple ones, increasing the number of shares while keeping the total value the same.
For example, a 2-for-1 stock split would cut the stock price from $1,000 to $500, making it more accessible to individual investors and potentially increasing market liquidity.
Types of stock splits include forward splits, which increase outstanding shares and reduce share price, and reverse splits, which do the opposite by consolidating shares.
The perception of a company can change significantly after a stock split, as it affects investor confidence and liquidity in the market.
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