Stock Split
When a company increases its number of outstanding shares by issuing more shares to current holders, lowering the price per share proportionally.
Example
In a 4-for-1 stock split, an investor holding 10 shares at $800 each ends up holding 40 shares at $200 each — the total value of $8,000 doesn't change, only the number and price of shares.
Common Misconception
A stock split doesn't create or add any value on its own — it's a purely cosmetic change to share count and price, though companies sometimes split around periods of strong performance, which can create a false association between splits and future gains.
Why It Matters
Splits make a stock's per-share price look more accessible to smaller investors and can slightly improve trading liquidity, but they shouldn't be read as a signal about the underlying business.