What does a stock split achieve?

A stock split primarily increases the number of shares outstanding while decreasing the price of each individual share. This process is often undertaken by a company to make its shares more affordable for a broader range of investors. For example, if a company performs a 2-for-1 stock split, each shareholder would receive an additional share for every share they own, effectively doubling the total number of shares while halving the price of each share. The overall market capitalization of the company remains unchanged; only the stock's price and share count adjust.

This action can enhance liquidity in the market, making it more appealing for smaller investors to buy shares, which can potentially lead to an increase in trading volume and a healthier trading environment. Splitting the stock does not affect the company's overall value, but it can improve accessibility and investor interest.