What is Stock Split?

A stock split or forward stock split is an event where a company increases the number of its shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of all shares outstanding remains the same, because a split does not fundamentally change the company's value.

It is usually done to boost the stock's liquidity as the price is lower. The most common split ratios are 2-for-1 or 3-for-1 (denoted as 2:1 or 3:1), which means that the stockholder will have two or three shares for each share that they hold, respectively, after the split takes place

Reverse stock splits are the opposite transaction, in which a company lowers the number of shares outstanding.  Similar to forward stock split, the market value of the company after a reverse stock split remains the same hence, the share price will increase accordingly after a reverse stock split.

Usually its done if the company share price had decreased to a level at which it runs the risk of being delisted from an exchange for not meeting the minimum price required for a listing.

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