Stock Split
A stock split is when a company breaks one share into more shares. It does not mean the company became more valuable overnight.
Start the lessonIntroduction
One share becomes more shares
In a stock split, a company divides each existing share into a larger number of smaller shares. For example, in a 2-for-1 split, one old share becomes two new shares. The face value per share is adjusted as per the announced ratio, but the company is not necessarily creating new value just because the share count went up.
The short answer
Your share count may rise while the per-share price and face value adjust. A split alone does not create extra business value or guarantee a gain.
2-for-1 example
Explore a stock split
Enter illustrative details. The theoretical post-split price assumes no other market changes and is not a price prediction.
Illustrative shares after split
20 shares
10 × 2 new shares per old share
Theoretical per-share figures
Price: ₹100
Face value: ₹5
Theoretical prices and face values here are divided by the split factor for learning. Actual market prices can change and the announced terms may have specific details.
Split vs bonus issue
Different actions, different mechanics
This is a simplified comparison. Check the specific corporate action announcement for its terms and treatment.
What to keep in mind
A split does not guarantee a gain
- A split increases the number of shares and adjusts face value according to the announced ratio.
- A lower theoretical price per share does not mean the company has become cheaper or more valuable by itself.
- Theoretical adjustments assume nothing else changes; real market prices can move for many reasons.
- Check official company and exchange announcements for the ratio, eligibility, and effective dates.
- A stock split is different from a bonus issue, even though both can increase a shareholder's share count.
Key points
What to remember
- A split divides each old share into more shares.
- The face value per share is adjusted according to the split terms.
- A 2-for-1 split doubles the share count for each eligible old share.
- The theoretical per-share price adjusts in the opposite direction.
- A split alone does not guarantee a gain or change the company's business value.
- Read official announcements for the specific terms and dates.
This lesson is for education only, not personalized financial, tax, or investment advice. Investments in securities are subject to market risks.
Test yourself
5-question quiz
Choose one answer for each question, then check your score.