What Is a Stock Split? A Beginner’s Guide
If you’ve followed the stock market for a while, you’ve probably heard that a company announced a stock split. Many beginners think a stock split makes them richer overnight, but that’s not how it works.
A stock split simply increases the number of shares while reducing the price per share. The total value of your investment remains the same immediately after the split.
For example, if you own one share worth $1,000 and the company announces a 2-for-1 stock split, you will own two shares worth about $500 each. Your investment is still worth $1,000.