What a stock split is and what it means when one happens:
Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.When a company is concerned that its share price is too high or too low, it can opt for a stock split or a reverse stock split.
Say you have one share of a company’s stock. If the company opts for a 2-for-1 stock split, the company would grant you an additional share, but each share would be valued at half the amount of the original. After the split, your two shares would be worth the same as the one share you started with.A reverse stock split reduces a company’s number of shares outstanding.
On the other hand, a reverse stock split is often aimed at helping a company meet the minimum requirements to remain listed on an exchange.
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