Stock split Definition
A procedure used by a corporation to increase the number of shares outstanding, which must be approved by shareholders. This does not change the total market value of the underlying corporation, but will normally lower the current market price of its stock. For example, a stock with a market value of $40.00 per share which splits its stock 2-for-1, would now have twice as many shares outstanding and a market value of $20.00. In a 3-for-2 split, three new shares are exchanged for every two shares. Under a reverse stock split each old share is equal to a fraction of a new share.