stock-split

Vocabulary Word

Definition

Imagine a company as a pizza divided into slices. When a 'stock-split' happens, it's like each slice is divided into smaller pieces, but you still have the same amount of pizza. It increases the shares of a company without affecting the total value.

Examples in Different Contexts

For investor impact, a stock split is typically viewed positively, as it can indicate company growth and make shares appear more attractive due to the lower price. An investor might explain, 'I see the stock split as a sign of confidence from the company’s management in its future prospects.'

Practice Scenarios

Tech

Scenario:

Our company's market capitalization has been consistently high but the individual stock prices have also gone up considerably.

Response:

If the aim is to make it accessible to individual investors, we should consider a stock-split.

Business

Scenario:

The price of ABC company's shares are soaring. It's making them less accessible for smaller investors.

Response:

Then they should consider a stock-split to lower the share price and make it more affordable.