Stock splits might sound complicated, but at their core, they’re relatively straightforward events that can impact how you manage your investments. A stock split occurs when a company decides to issue additional shares to its existing shareholders, which reduces the price per share proportionally. While this may seem like a big change, the total value of your investment remains the same immediately following the split. But why do companies do this, and what does it mean for you as an investor? How Stock Splits Work A stock split increases the number of shares available while simultaneously lowering the price of each share. For example, if you own 100 shares of a company that is trading at $500 per share, and the company announces a 2-for-1 stock split, your 100 shares will turn into 200 shares. However, the share price will drop from $500 to $250. The total value of your investment remains the same: $50,000. Here’s another way to think about it: imagine you have a pizza. Before the split, you had one large pizza cut into 8 slices. After the split, you have the