What Is a Stock Split and Why Does It Happen?


Amazon (AMZN)

Stock Split


Alphabet (GOOG)

Stock splits are distinctive occurrences that market observers, traders, and investors all look forward to. This significant and unusual event has the potential to completely alter the market and the participating businesses. What exactly is a stock split, what does it imply to an investor, and why do businesses divide their shares?

splits in stock

A stock split is what?

Stock splits, as the name suggests, occur when businesses divide their stock by boosting the number of outstanding shares. But even though there are more shares outstanding, the company’s value stays the same.

Recent Notable Stock Splits

Alphabet (GOOG), Amazon (AMZN), and Tesla are a few companies that recently announced stock splits over 2022. (TSLA). As was already established, stock splits do not necessarily result in an increase in stock price. Consider the internet titan Alphabet, whose shares was divided 20 to 1 on July 15, 2022. Following the split, the price of the company’s shares fluctuated, possibly due to inflation and increasing interest rates. This might be the case since investors frequently avoid tech equities in favour of safe haven investments that are more resistant to inflation. The firm’s stock increased by 2% in the first 12 days following the split. Alphabet, however, has decreased by 15% between the time of the stock split and this writing.

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