Invested: The Rule #1 Investing Podcast

Stock splits happen from time to time, so it's important for us as investors to understand what they mean and how they might impact our investing decisions. A stock split is when a company decides to exchange more shares of its stock at a lower price for stockholders' existing shares. So, what happens to a stock’s price when it splits?   Nothing actually, although, it’s going to look like something big happened. Stock splits don’t change the market cap, which is the market price of the stock on a given day multiplied by all of the shares, or the sticker price of a stock one single cent. Not a penny. All a stock split does is change the number of shares and the price per share. I repeat: this does not change the total value of all those shares by even one cent. A lower stock price makes it easier to trade because the stock becomes more attainable for interested investors who may have been priced out of buying it in the past. Lower prices make it easier to find buyers than higher prices. When a stock price