![]() If you find value in these videos, like, share and subscribe to our channel. Thank you so much for reading about stock splits, in our series, Learn with Upstox. Hence, it does not dilute the pattern of shareholding at all. The split is uniform for all the shares across all the shareholders. The final question, does this change the shareholding? If I own 1% of a company, will I own any less of it after the split? Definitely not. Do stock splits change the shareholding pattern of a company? Many times, post split, and sometimes even just after the announcement of the split, the stock ends up rallying a little bit. Well, now an expensive stock has become affordable since it’s price has been reduced, so many retail investors end up participating, often causing a small rally. You may be wondering how does this improve the stock price? 300 for a share, ignoring that 10% on both stocks means the same rate of return. 1,500 seems a little too expensive for us but we’re willing to pay Rs. All us newbie investors always base the cost of a share on its share price and not its valuation. Now, this makes the stock a lot more affordable for smaller retail investors. Laurus Labs recently did a 1:5 split, wherein the face value of each share split from Rs. Why does a company do a stock split?ĭoes this affect the stock price? Of course, it does! This is why it’s done in the first place. So, every shareholder with one share now has 2 shares and the face value of each share is now Rs. 10, and the company does a 1:1 split, every shareholder receives one extra share for each share that he/she owns, and the face value gets split in half. For example, if the face value of a stock is Rs. Stock splits are always done on the basis of face value. In this case, you need to understand a very important concept, which is face value. Stock splits are amazing to make stocks more affordable and also improve the stock price. Let’s discuss the topic of stock splits, in which we are going to talk about - what exactly are stock splits? And why does a company choose to opt for them? I’m Aaditya Iyengar and in this series, we’ll be discussing some key aspects of fundamental analysis, corporate actions and some important general concepts about the stock market. Welcome to our new series, Learn with Upstox! But first, let me finish eating this cookie. Let’s use this idea to understand stock splits. *By signing up you agree to our Terms and Conditions ![]()
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