U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

Stock Splits

Companies often split shares of their stock to try to make them more affordable to individual investors. Unlike an issuance of new shares, a stock split does not dilute the ownership interests of existing shareholders. When a company declares a stock split, its share price will decrease, but a shareholder’s total market value will remain the same. For example, if you own 100 shares of a company that trades at $100 per share and the company declares a two for one stock split, you will own a total of 200 shares at $50 per share immediately after the split. If the company pays a dividend, your dividends paid per share will also fall proportionately.

A stock may split two for one, three for two, or any other combination. A reverse stock split occurs when a company reduces its number of outstanding shares, such as a one for two split. For a history of a company’s stock splits, check the company’s web site or contact its investor relations department.

http://www.sec.gov/answers/stocksplit.htm

We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.


Modified: 03/29/2010