A stock split is a corporate action which divides the face value of the outstanding shares of a company, thus increasing the number of shares available in the markets as free float.
A corporate action ranges from dividend payments, bonus issues, stock splits to mergers & acquisitions (M&As), and can materially impact you as a shareholder.
A corporate action is a great indicator of the company’s financial health and its short-term future.
If you're a shareholder or considering buying shares, you need to know the effect of such corporate actions on the company’s stock.
Here are some effects of a stock split:
Stock splits are usually undertaken by companies with high per-share price and are gratifying to shareholders, both immediately and in the longer term.
Do you know that legendary investor Warren Buffett hates stock splits? His multinational conglomerate company Berkshire Hathaway has never undergone a stock split.
Check out the Indian companies that swear by Buffett’s no-split rule.
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