stock split

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Stock split

Occurs when a firm issues new shares of stock and in turn lowers the current market price of its stock to a level that is proportionate to pre-split prices. For example, if IBM trades at $100 before a two-for-one split, after the split it will trade at $50, and holders of the stock will have twice as many shares as they had before the split. See: Split.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Stock Split

The act of a publicly-traded company increasing the number of outstanding shares while maintaining the same market capitalization. In other words, a company engages in a stock split in order to decrease its share price by increasing the number of shares available. Current holders of the stock are given more shares so that they maintain the same percentage of ownership in the company. For example, a company with a share price of $400 may double the number of shares so that the share price drops to $200. Companies conduct stock splits for a number of reasons; one possible reason is to keep its shares affordable for investors. See also: Last Split, Split Ratio, Split Adjusted.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

stock split

See split.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Stock split.

When a company wants to make its shares more attractive and affordable to a greater number of investors, it may authorize a stock split to create more shares selling at a lower price.

A 2-for-1 stock split, for example, doubles the number of outstanding shares and halves the price. If you own 100 shares of a stock selling at $50 a share, for a total value of $5,000, and the company's directors authorize a 2-for-1 split, you would own 200 shares priced at $25, with the same total value of $5,000.

Announcements of stock splits, or anticipated stock splits, often generate a great deal of interest. Buyers may simply want to take advantage of the lower share price, or they may believe that the split stock will increase in value, moving back toward its presplit price.

While 2-for-1 splits are the most common, stocks can be also be split 3-for-1, 10-for-1, or any other combination. In addition, a company can reverse the process and consolidate shares to reduce their number by authorizing a reverse stock split.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

stock split

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

stock split


share split

an increase in the number of SHARES in a JOINT-STOCK COMPANY that does not affect the capitalization of the company. For example, Company X has 10,000 authorized, issued and fully paid-up shares, each with a par value of £1, and total SHAREHOLDERS’ CAPITAL is shown in the BALANCE SHEET at £10,000. The STOCK EXCHANGE values the company at £100,000, making each share worth £10. The company wishes to attract a wider shareholder base by reducing the market PRICE of each share, so it undertakes a two-to-one stock split, giving existing shareholders two new 50p shares for each share held. The company now has 20,000 authorized, issued and fully paid-up shares of 50p nominal value, and capitalization of the company remains unchanged at £10,000. However, now the stock-market price of the shares will be £5, which it is hoped will improve the marketability of the shares. See also SHARE CAPITAL.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

Stock Split

Additional shares of stock distributed to shareholders at no cost. The number of shares received are a ratio of the shares owned. The basis of the original shares is generally apportioned equally to the total shares owned after the split.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
This result is consistent with our earlier observation in Figures 1c and 2c that reverse split firms in the H5H5 group do not incrementally attract more institutional investors (both NII and PIH) than their respective control group after the reverse split (i.e., slope is similar between H5H5 and its control group).
So why do I say Sirius XM will not be doing a reverse split? How can I be so confident?
Its reverse split plan would have given shareholders one share of common stock for every 20 to 80 shares of stock they held, depending on a ratio authorized by directors.
Companies use reverse splits when stocks are depressed as a way to boost share prices while decreasing the number of shares outstanding.
"We expect this reverse split will raise the share price of our common stock and enable us to regain compliance with the Nasdaq capital market's listing maintenance standards while facilitating a more appropriate number of shares outstanding relative to the size of the company."
The reverse split will affect the trading denomination of DGAZ, but it will not have any effect on the stated principal amount of DGAZ, except that the stated principal amount of DGAZ will be reduced by the corresponding aggregate amount of any cash payments for the partials.
(NASDAQ: NURO) has consummated a one-for-four reverse split of its common stock, the company said.
"As we continue to make strides toward an uplisting, the reverse split, which received strong stockholder support at our annual meeting, is an important step, since the maintenance of a minimum closing price of S3.00 for at least five trading days is needed to fulfill the share price requirement for a NASDAQ listing," said CEO Tony Fiorino.
Over 84 percent of the company's outstanding shares were voted at the special meeting, and over 76 percent of the votes cast were in favor of the reverse split.
The firm's management has decided to withdraw earlier plans to complete a reverse split and believes that the present market capitalisation of the company is 'extremely undervalued'.
The reverse split will be effective August 2, 2010.