Splits are corporate actions used to adjust the stock’s trading price and share amounts without changing the company’s overall value.
What is a stock split and why does it happen?
A stock split (or a forward stock split) is a type of corporate action where a company increases the total number of its shares. It’s important to note that the value of that position is not directly affected by the split as the price of each share will split as well. Examples of why a stock split may happen include:
- To make shares more accessible for investors
- To increase liquidity in the market
What is a reverse stock split and why does it happen?
A reverse stock split is a corporate action where the instrument’s shares in total are decreased. This increases the stock price proportionally but does not impact the company’s value. Examples of why a reverse stock split may happen include:
- To increase stock prices
- To meet exchange listing requirements
What happens after the stock I own goes through a split?
It’s important to note that each split is unique. If a stock you own is going through a split process, it’s best to follow official communications directly from the source.
- Forward stock split: For example, in a 2-for-1 split, if you owned 1 share worth $100, you'd end up with 2 shares worth $50 each. Your total value remains $100.
- Reverse stock split: For example, in a 1-for-2 reverse split, if you owned 2 shares worth $50 each, you would end up with 1 share worth $100. Your total value remains $100.
We strive to also send you an email to your verified email address about any splits in your portfolio, however please note that the email may not always be sent prior to the event. Lightyear processes all corporate actions for you and there's nothing you need to do.