What Is A Stock Split Definition Tuesday, June 25, 3:56 PM ET
Stock splits are used to increase the number of shares in a publicly traded company by keeping the market cap consistent, while increasing the number of shares outstanding and a lower price per share.
A reverse stock split decreases the number of shares outstanding, also keeping market cap consistent, while raising the price of the stock.
Stock splits and reverse stock splits can be done with varying ratios - sometimes "2 for 1", "3 for 2", "5 for 1", etc. but there is no particular rule for how the split takes place.
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