What Is Stock Split?
Sigachi Industries (SIGACHI) recently initiated its long-anticipated 10:1 stock split.
- Stock Split happens when a company increases the number of its shares to boost the stock’s liquidity.
- It is a corporate action in which a company issues additional shares to shareholders, increasing the total by the specified ratio based on the shares they held previously.
- Although the number of shares outstanding increases, there is no change to the company’s total market capitalization as the price of each share will split as well.
- The most common split ratios are 2-for-1 or 3-for-1 (sometimes denoted as 2:1 or 3:1). This means that for every share held before the split, each stockholder will have two or three shares, respectively, after the split.
- The number of shares increases, but the price per share goes down in proportion.
- Stock split is done to infuse liquidity and to make shares affordable for various investors who could not buy the shares of that company before due to high prices.
