Split

(redirected from splits)
Also found in: Dictionary, Thesaurus, Medical, Legal, Idioms, Encyclopedia, Wikipedia.
Related to splits: splitsville, stock splits

Split

Sometimes companies split their outstanding shares into more shares. If a company with 1 million shares executes a two-for-one split, the company would have 2 million shares. An investor with 100 shares before the split would hold 200 shares after the split. The investor's percentage of equity in the company remains the same, and the share price of the stock owned is one-half the price of the stock on the day prior to the split.

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. See also: Last Split, Split Ratio, Split Adjusted.

split

A proportionate increase in the number of shares of outstanding stock without a corresponding increase in assets or in funds available, as would be the case in a new stock offering or in an acquisition that uses stock as payment. Essentially, a firm splits its stock to reduce the market price and make the shares attractive to a larger pool of investors, although it is questionable if the firm's stockholders actually benefit from a split because share prices are reduced proportionately with the increase in shares outstanding. A 4-for-1 split would result in an owner of 100 shares receiving 300 additional shares, or an after-split total of 4 shares for every 1 share owned before the split. Also called split up, stock split. Compare reverse stock split.
Case Study In April 1996, directors of the Coca-Cola Company approved a 2-for-1 split, the firm's fourth stock split in a decade. The announcement stated that trading in the split shares would begin on May 13, approximately a month after the split was announced. Shares of the firm's common stock fell by $1.25 with the announcement. Shareholders of Coca-Cola could expect that the stock price would decrease by half when the securities commenced trading on a post-split basis. A stock split results in additional shares of ownership without a corresponding change in total income or assets. All per-share financial statistics decline in proportion to the size of the split. Thus, a 2-for-1 split results in twice the outstanding shares, each with half the book value and half the earnings as prior to the split. In general, stock splits create more paper but not more value for shareholders, because the market value of the stock can be expected to fall in proportion to the size of the split. A stock trading at $60 per share just prior to a 4-for-1 split should trade at approximately $15 per share following the split. Academic research investigating how or when investors can profitably invest in stock split situations offers mixed results. Some research indicates that trading stock just prior to a split may create unusual profit opportunities. One well-known study finds that unusual returns can be earned in the days before and after the announcement, but not on the date of the actual split. Other research indicates investors will earn unusually low returns by investing in stock in the year or two following a split. This variability of results means the individual investors cannot expect to earn unusual profits by purchasing a stock just prior to or following a split. By the time a split occurs, any unusual profit opportunity has already passed.
References in periodicals archive ?
Despite a volatile market during the first half of 2000, Ruettgers felt that a stock split would create value for existing investors, while also making the stock more attractive to new investors.
The different stock split results in these two examples echo a warning issued by Outlaw.
Although the 714 area code in Orange County is not set to be split until next April, complaints about assigning a new area code to the county seat in Santa Ana sent planners back to the drawing boards.
It is not known whether there will be complaints about the 805 split, which is said to have the backing of the public, telecom industry and local civic leaders, according to code administration spokesman Chris Kniestedt.
Several Ventura County residents said Wednesday that they have no gripes about the 805 split.
MAP: Boundaries of areas to be affected by proposed 805 area code split, showing Ventura County, Santa Barbara County and San Luis Obispo County.
NYSE:DYN) announced July 25 that its board approved a 2-1 stock split to be issued on Aug.
More information about "Stock Split Secrets" the book or "Stock Split Secrets" the course is available on-line at www.
Nasdaq:MYGN) announced today that its board approved a 2-1 stock split to be payable on Sept.
Nasdaq:ERTS) announced yesterday that its board approved a 2-1 stock split to be distributed on Sept.
NYSE:PKE) announced yesterday that its board approved a 3-2 stock split, pending shareholder approval at a special meeting to be held on Aug.
Limited (Nasdaq:ACLNF) announced yesterday that its board approved a 5-4 stock split to be issued on Sept.