What is the concept of a stock split?

A stock split is a corporate action in which a company issues more shares to its existing shareholders, increasing the total number of outstanding shares while reducing the price per share. For example, in a 2-for-1 stock split, shareholders receive two shares for every one they already own, but the price per share is halved. A stock split does not affect the overall value of a shareholder’s investment, as the total value remains the same, but it can make the stock more affordable for smaller investors and potentially increase liquidity. Companies typically perform stock splits when their share price becomes too high, making it less accessible to retail investors.