Stock split
A stock split is when a company divides its existing stock into multiple new shares. This means that if a shareholder had one share in a company, after a stock split they will have multiple shares. The price per share will fall but the combined value will remain the same (assuming the share price is not affected). The percentage of the company that you own will therefore remain the same.
Please note that (reverse) stock splits can happen at the same time as other corporate actions, which might have an effect on your ownership share.
A stock split can be implemented by the issuing institution to enhance tradability.
Example:
- A share costs 120 euros
- There is a stock split with a ratio of 1:3
- You receive three new shares instead of each share you had before
- The three shares then cost 40 euros each
Example: Netflix
There is a stock split with a ratio of 1:10. You receive ten new shares instead of each share. The stock price per share changes in the same ratio.
No rights can be derived from this example. For more information on this stock split, please consult the company's investor relations page.
Reverse stock split
This is the opposite of a stock split, involving an increase in the price per share without increasing the total nominal share capital. In a few words, multiple stocks are merged into a smaller amount of shares, but the percentage of the company that you own will remain the same.
Example:
- A share costs 8 euros, and you have 10 shares with a total value of 80 euros
- There is a reverse stock split with a ratio of 2:1
- You receive 5 new shares instead of 10 shares previously owned
- The five shares then cost 16 euros per share, but the total value remains 80 euros
Important to know
A stock split can impact the display of your unrealized results. Foreign funds can usually not be sold immediately after a (reverse) stock split. This is because the shares must first be delivered to us.
Read more about dividends and other corporate actions.