A stock split is a corporate action in which a company increases or decreases the number of its shares in the market, usually to make the stock more accessible or to adjust the share structure.
Types of Stock Splits
Forward Stock Split:
In a forward stock split, the company increases the total number of outstanding shares by issuing additional shares to existing shareholders at a fixed ratio (e.g., 2-for-1). The price per share decreases in the same proportion, so the overall value of the company and each shareholder’s investment remain unchanged.
After a forward split, you’ll own more shares at a lower price per share. If you previously owned 10 shares at $100 each and the company performs a 2-for-1 split, you’ll now own 20 shares at $50 each, keeping the total value of your investments the same.
Reverse Stock Split:
In a reverse stock split, the company reduces the number of outstanding shares by consolidating them. Each existing share is converted into a fraction of a share, and the share price increases in the same proportion. This action does not change the total value of the company or the shareholders’ equity.
After a reverse split, you’ll own fewer shares, but each share will be worth more. For example, if you had 10 shares at $10 each and the company performs a 1-for-2 reverse split, you’ll now have 5 shares at $20 each, keeping the total value unchanged.
After a stock split or reverse stock split, it may take 1-3 business days for these changes to reflect in your shares in Hapi.