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What is a Stock Split and Why Do Stocks Split?

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Stock Splits Simplified: -# of shares before split = 100 at $50/share -Split = 2/1 -# of shares after split = 200 at $25/share -In order to own the same portion of the company, the stock price goes down to $25/share -100 shares at $50/share = 200 shares at $25/share -The value is the same, only the share price changes -Splits can come in different denominations (e.g. 2/1, 3/1, 5/1, 3/2, etc) Why do Companies Do This? -To allow new investors to come in at a lower stock price -To re-balance their shares ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome
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Text Comments (50)
Jay Gee (1 month ago)
Thank you for explaining that.
You are more than welcome. Thank you for watching!
The Aahil (3 months ago)
Very helpful. Thank you.
Le Mai Anh (11 months ago)
thank you very much. it helps a lot
Mr Dude (11 months ago)
What about the other way around 1:5?
Tayler Lewis (1 year ago)
You're the real MVP at explaining concepts for the Series 7. Thanks for your help!
Mcom 2015 (1 year ago)
thanks a lot
Saif Jawad (1 year ago)
Great video Sasha, thank you so much, your video is Awsome
James Smith (1 year ago)
how often does this happen ?
Brendan Kamper (1 year ago)
Hi Sasha, Love your videos. They are very informative and concise, especially for someone relatively new to the field. Quick question: would the stock price dip similarly to when there is an IPO e.g. stocks get dumped into the market? Or does the influx of new investors buying the lower priced stocks equal this out? Is there a good marker to look at for when to buy/sell? Or like with the IPO, should you wait until all the noise quiets down?
Brendan Kamper (1 year ago)
Sasha Evdakov Gotcha. Thanks for the replies!
Brendan Kamper (1 year ago)
But about the stock splits.. Does a similar trend happen where there is greater instability? A big dip?
Brendan Kamper (1 year ago)
Sasha Evdakov I see. You have to be patient about it all. Keep up the good work!
Sadaf M (1 year ago)
Very helpful. Thanks!
harry singh (2 years ago)
Hi Shasha, I am new in this field. So,for example if share price of a company was 100$ and now after share split its price goes very down say becomes 25$,so shall I buy the stock(expecting that the share price will increase) ? Thanks in advance :)
harry singh (2 years ago)
Can you please tell me other conditions to be looked at.Actually in Indian market,a stock was for Rs1000 per unit,but after share split it is Rs.500 now. So,is it mean that its price has halved and it is good time to buy ?
mac 187 (2 years ago)
yo dis nigga gay
Rose Da Supreme '88 (1 year ago)
Sasha Evdakov keep doing your thing
Alai Syafiqah (2 years ago)
what about stock splits on the issuance of shares?
iinllo12 (2 years ago)
I got 2 shares (that I bought at 10:10, total of 20:20) of a company that did a split 1:15.. So they told me that they are going to give me cash because decimals. After the split the company price went around 35. My doubt is how many cash im going to receive? Im going to receive the original amount of 20:20 or ~what ? Thanks
Pretti K (2 years ago)
Hi Sasha. How does a stock split affect it's options (as in options trading)?
Pretti K (2 years ago)
+Sasha Evdakov (TradersFly) Cool. thanks Sash
TheCv215 (2 years ago)
What about a reverse split?
danzer013 (3 years ago)
I will never understand why sources tend to make simple concepts such as this one sound so complicated and difficult. I will never understand why I would have to check about 5 different sources before I find one (such as this one) that explains these concepts in English. I checked accountingtools, accounting coach, and investopedia before resorting to youtube, and they made stock splits sound like rocket science.
slomy spin (3 years ago)
is there a way to know ahead of schedule when a stock splits? is that a calendar date or announcment? and does the split gain value (stock price) or decrease at a split? my guess is that it has the trend of an IPO, where typically the value drops because there is less demand for it ... ???
CheeseWiZ (3 years ago)
There's one thing I just can't wrap my head around.  If the purpose of stock split is to keep the stock lower and affordable for new investors, why doesn't the stock price change (or drop) to reflect this change?  I see a split happen and the price for the stock is the same or continues to rise.  Could you help, Sasha?
CheeseWiZ (3 years ago)
+Sasha Evdakov I see. So a stock like EXPO for instance that had a recent stock split, the real share prices from a month ago are now cut in half on the historical chart... right?
ammr mmar (3 years ago)
Thanx lots
iamKythus (3 years ago)
You really enjoy referencing Nike stock! Subliminal messaging :P Is this an indication of a company in need of financial help?
Sanjay Kumar (3 years ago)
Very well advised and given examples to we peoples. Thank you very much!
Khalid Shaikh (3 years ago)
Sanjay need to talk with you for traffic pls add me
Connie Presser (4 years ago)
I am confused about calculating Market Price for an 8:1 split.  There were 39000 shares @ $5 par. For the split I calculated the # of shares using 39000*8=312000 and the par value per share was calculated using 5/8 - .625.  How do I calculate the market price per share if market price of common stock is now $100?
Cynthia Davila (4 years ago)
Very helpful. Thank you
google did a split recently
TheHazeG (4 years ago)
Thank you, my professor/textbook doesn't explain shit
Manœuvre Warfighter (4 years ago)
What happens when companies split but the stock stays at the same prices? LMT did that.
Manœuvre Warfighter (4 years ago)
That makes sense! Thank you!
Manœuvre Warfighter (4 years ago)
Ok thank you. So basically all of these prices are the wrong prices because most of them should be 50% or more of what we see.
Manœuvre Warfighter (4 years ago)
So if NKE splits at $100 but online graphs will continue to show $100+? Will there be two different prices out there. Or is there a way to turn the "adjusted" metric off.
Manœuvre Warfighter (4 years ago)
Thank you for the prompt reply!! I am just learning this stuff and it can be very confusing. Ok so in Dec 26, 2012. NKE did a 2:1 Split but the stock price didn't drop 50%, in fact it increased. https://www.google.com/finance?q=nke&ei=glc4U5i-PKSoigKrNQ
Artyte B. (4 years ago)
is a stock split common?
amelia l (5 years ago)
Well what if a stock split happens but none of the stockholders want to do anything about it? Doesn't that defeat the purpose?
sumflow (5 years ago)
Should we bail out out companies that have to resort to stock splits to maintain liquidity?
sumflow (5 years ago)
It looks like a shell game, they cut the pie into smaller pieces and the uninformed think they are getting something for nothing.
sumflow (5 years ago)
You do not need increased earnings, or cash flow to split a stock into smaller parts. Are you saying they do it to increase marketability to small shareholders because price is weakening as large shareholders will not support the price any more?
sumflow (5 years ago)
If the stock was strong there is no reason management would consider splitting.
sumflow (5 years ago)
That is not what Warren Buffett teaches us. More cheap owners. More traders mabe. Why would the stock go up and stay up. You have increased the expenses, but no increased cash flow. No new intrinsic value that you have shown.
sumflow (5 years ago)
Do stock splits ad value?
Adepu Santhosh (5 years ago)
what is meaning of NKE while your going to giving briefly explain about stock give some tax on the board and and please mentions the note point
jasonbbb (5 years ago)
thanks

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