Too embarrassed to ask: what is a stock split?

Discover what a "stock split" is, and how it expects the share price in this week's “too embarrassed to ask”.

A “stock split”, or “share split”, is when a company decides to increase the number of shares it has in issue by giving its current investors extra shares for each existing share that they already own. Extra shares!

That sounds great! But of course, shareholders aren’t really getting anything extra. Each investor still holds the same percentage of the company as they did before the split. It’s just that it’s divided into more individual shares.

As a result, the company’s share price will fall to reflect the larger number of shares in issue. For example, say a company had 10,000 shares in issue, at a share price of £1 per share. It carries out a two for one split, so that each investor ends up with two shares for every one they originally owned.

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