Stock splits

A split changes the number of shares and the price of each one, but not what the company is worth.

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In a stock split, a company divides each share into several. In a 4-for-1 split, someone with 1 share at $400 ends up with 4 shares at $100. They own exactly the same part of the company, and the company's market value doesn't change.

Why companies split their shares

Usually because the price of each share has become very high. A lower price can make it easier for people to buy whole shares and for employees to receive them. Apple split its shares 4-for-1 in 2020, and NVIDIA 10-for-1 in 2024.

Reverse splits

The opposite also exists. In a reverse split, several shares are combined into one, and the price of each share rises in the same proportion. Companies often do this after a large fall in their share price. Citigroup did a 1-for-10 reverse split in 2011, and General Electric a 1-for-8 one in 2021.

Why old prices are adjusted

Without an adjustment, a chart would show Apple's share price dropping 75% on the day of its split, even though no one lost money. So price histories are usually split-adjusted: past prices are divided by the split ratio, so the whole history uses today's shares. Per-share numbers, such as earnings per share and dividends per share, are adjusted the same way.