Stock split

Partitioning company shares, in order to reduce the price per share. In simple words, your hefty stocks break down into smaller chips with an adjustable rate per share. If you had 100 Amazon stocks valued 2500$ per share (250 000$ of assets), and your have undergone the 15-to-1 stock split, then 100x15=1500, congratulations, now you've got 1500 of Amazon shares!

Do I lose money?

You get the price adjusted accordingly to your quantity. As a rule, companies make money for themselves, not for investors. Now you've got 1500 Amazon shares with the adjusted rate of 140$ per share (the official decision by the board of directors), you apply 1500x140 = 210 000. Boom! Your portfolio diminished by 40 000$ at the time of the split. Should you panic? You should not, because stock split (unlike the reverse stock split) is generally initiated by blue chips, and the price par value will climb back eventually.

Pros

• you have more shares
• more investors pour in
• market becomes more competitive
• company receives more funds in trades

Cons

• price of your portfolio may drop, leaving you with no options but to wait
• can create volatility, rumors, impulsive decision, unwanted short-selling, etc.

Stock split or stock dilution?

The difference between the stock split and the stock dilution is that the former:

• does not alter your stake ownership in a company
• usually perceived more positively than the dilution
• does not physically issue new shares
• does not reduce your stakes physically
• does not diminish your voting powers