When a company decides to split its stock, it generates a lot of excitement. A stock split is when a company divides each of its existing shares into a different number of shares. For example, in a stock split, you might get three shares for every one that you already own.
A stock split occurs when a company increases its number of shares outstanding by dividing existing shares or multiplying the share count and reducing the share price to compensate. A stock split lowers share prices but doesn't change a business's fundamental value or the total value of the shares owned by shareholders.
Stock splits in a growing business attract a lot of attention from retail investors. For example, after its 2024 stock split was announced, Nvidia's (NVDA 0.52%) stock price zoomed higher.
Retail Investor
How a stock split works
How a stock split works
When a company decides to split its stock, it will first issue a press release with key details of the split. For example, this will include the ratio of the stock split (how many shares you'll get for each one you own), as well as the effective date of the split, when the stock will begin trading on a split-adjusted basis.
On the effective date of a stock split, the share price will be proportionately reduced, but the additional shares will appear in investors' accounts. If the company completes a 10-for-1 stock split, like Nvidia did in 2024, and you owned 20 shares worth $100 each prior to the split, you would now own 200 shares worth $10 each.
Upcoming splits
Upcoming stock splits
As of this writing in September 2025, there aren't any high-profile stock splits scheduled for the near future.
There has also been speculation that megacap technology stocks Microsoft (MSFT -1.03%) and Meta Platforms (META -2.65%) could announce stock splits of their own in the not-too-distant future, but they haven't already. Other stocks to watch for that could split in 2025 or soon after include:
- Credit rating and financial analytics company Fair Isaac (FICO 2.04%) hasn't split its stock since 2004. More than 20 years later, its shares are trading for around $1,550 in September 2025.
- Booking Holdings (BKNG -1.43%) did a reverse stock split in 2003 (back when it was known as Priceline.com) in the aftermath of the dot-com bubble. Every six shares investors owned at the time were consolidated into one share. Each share was worth more than $5,400 as of September 2025.
- Microsoft trades for about $510 per share in September 2025, which is a fraction of the price of the other two stocks on this list. However, the company has a history of splitting its stock and could be especially inclined to do so since it's part of the price-weighted Dow Jones Industrial Average.
Recent splits
Recent stock splits
A few notable stock splits have occurred over the past year or so:
- Deckers Outdoor (NASDAQ:DECK), the parent company of UGG, Teva, and other popular apparel brands announced the approval of its split following its 2024 annual meeting. For shareholders of record on Sept. 6, 2024, Decker executed a 6-for-1 split by paying five extra shares for every share owned. The distribution took place at market close on Sept. 16, 2024.
- Palo Alto Networks (PANW -0.07%) underwent a 2-for-1 stock split on Dec. 16, 2024. Palo Alto's stock now trades on a split-adjusted basis, meaning shares traded on Dec. 16 for roughly half of their price on Dec. 15, and investors saw twice as many shares in their brokerage accounts.
- Tractor Supply Company (TSCO -1.21%) had a 5-for-1 stock split that took effect on Dec. 20, 2024. Investors then held four times as many shares as they had previously, with each share trading for about one-fifth of the share price prior to the split.
- Auto parts company O'Reilly Automotive (ORLY -0.57%) finalized a 15-for-1 stock split on June 10, 2025.
The year 2024 was a fairly active one for stock splits, which is common in years when the stock market generally has a strong performance. However, 2025 has been rather quiet, at least through mid-September.
Purpose
Why companies do stock splits
Stock splits (as well as reverse stock splits) typically don't change the fundamental value of a company. They also don't change an investor's ownership stake in the company. For example, if you own a slice of pizza equal to one-quarter of the whole pie, cutting your slice up into smaller pieces doesn't change the fact that you still have one-quarter of the total pizza.
Since a stock split doesn't really fundamentally change anything, why would a business choose to do one? Often, it has to do with attracting new investors. A lower price per share attracts a lot of individual investors to a popular company.
Additionally, many publicly traded companies give employees an ownership stake in the business by granting them shares in the form of stock-based compensation. A lower share price can help a business manage the benefits issued to its employees.
Employee Stock Ownership Plan (ESOP)
Also, many companies repurchase shares as part of a return on investment to existing shareholders. A lower share price can help a company manage the purchases and returns to investors.
Take Amazon (AMZN -0.13%) as an example. In the filing for its 2022 stock split, the company stated, "The stock split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company."
Should I invest?
Should you buy a stock because of an upcoming split?
If you are a long-term investor who plans to own shares of a company for at least a few years, an upcoming stock split is no reason to buy an ownership stake in a business. A company generally has good reasons for initiating a split, but it doesn't change the fundamental value for shareholders.
Rather, look for companies benefiting from long-term secular growth trends, growing faster than their peers, and with healthy profit margins and balance sheets.
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Advantages and risks
Advantages and risks of a stock split
From an investor's perspective, a stock split can have the effect of making the company's shares more accessible to retail investors, as well as certain ETFs and mutual funds. It can also make options easier to trade and generally create a more liquid market for the company's securities.
However, investing in a stock split can have risks and potential rewards. Because of the increased accessibility I just mentioned, as well as the general principle that companies split their stock when things are going well, it could cause stock prices to rise. On the other hand, a split can also result in increased volatility, and that's especially true if you buy a stock after a split is announced.
FAQ
Upcoming stock splits FAQ
What do 'reverse' and 'forward' indicate in a stock split?
A reverse stock split means that a company is lowering its outstanding share count by combining several shares into one. A forward split, which is typically what is meant by the term "stock split," involves increasing the share count by effectively dividing each existing share into several shares.
Is it good if my stock splits?
Not necessarily. Sometimes, market interest in a stock increases when a stock split is announced. However, any stock price gains are temporary if the business's financial results don't increase to support the stock price speculation.
Do stocks rise after a split?
Sometimes. Due to increased retail investor interest in a smaller per-share price, often driven by the misconception that a stock split makes a company "cheaper," a stock may go up after a split. But any gains tend to be temporary unless the business generates higher corresponding financial results.
How do you know when a stock is going to split?
There's no way to tell for sure whether a company's management team and board of directors will announce a stock split. However, strong business performance and a track record of stock splits can increase the likelihood of an upcoming announcement of a stock split.
What does it mean when a stock splits?
A stock split does not change the fundamental value of the business. Think of it like slicing a pizza into smaller slices: The overall pizza remains the same size, but more slices are available.
