Liquidity means the ease with which investors can buy or sell shares on a stock exchange. Why do companies announce stock splits? Stock splits are a way for companies to increase their overall liquidity. Sticking with the dark chocolate bar analogy, after breaking the bar into smaller bits, you have smaller bits of dark chocolate, not more chocolate overall. The fundamentals of the company and the stock price have not changed. This does not mean that the stock has become cheaper. In this example of a 2-for-1 split, if you had one share of Company X at $10 per share, you now have two shares of Company X at $5 per share. For example, if a company board announces a 2-for-1 split, then you get one extra share for each share you own-but the share price will be halved. Similarly, in a stock split, it is very important to remember that the price of the share also is reduced. You still have the same amount of chocolate, just in smaller segments.

Your one big dark chocolate bar is broken down into multiple bite-size pieces. Think about it like a dark chocolate bar.

The value of your holdings is the same, just in smaller chunks. One share gets divided, or split, into multiple shares. Simply put, a stock split is exactly what it sounds like.

When does nvda split their stock