A stock split is a corporate action where the company divides the existing outstanding shares in order to boost the liquidity of shares. The prices of the shares adjust automatically in the stock market when the company implements the action. The equity capital of the company and its net assets remain the same. For instance, a board of directors for a company decides to do a 3:1 stock split. In this scenario, if the value per share stood at $90, the new value per share would become $30, while the net worth of the stock would remain the same. For every one share there would now be three.
Sep 21 2015 05:57 PM