More Shares, Same Value
Suppose you own 100 shares of a stock priced at $20 per share, for a total value of $2000. If the company announces a 3-for-2 split, then you would own 150 shares of stock valued at $13.33 per share. Companies split their stocks to make them more attractive to investors. who are more inclined to purchase moderately-priced stocks that expensive ones. This increase in investors causes the price to continue to rise. A stock split generally is considered a bullish event, but too many splits instituted too quickly could be a warning signal that the stock price is peaking.