list of Stock Splits (Upcoming Stock Splits in 2025)

Stock splits are type of corporate actions where a company decides to divide its existing shares into multiple shares and its face value changes but the market cap of the company remains unchanged.

Advantages of Stock Splits

• Increased Liquidity:As the number of shares increases, more number of investors are able to participate in trading.

• Affordability:When share prices are high, a stock split makes them more accessible to small-scale investors by reducing the cost per share.

• Positive Signal: stock split is often perceived as a positive signal by investors, indicating that the company's management is confident about its future prospects. This can lead to increased investor confidence and potentially drive up the stock price.

• Increased trading activity:A decrease in stock price tends to draw in numerous investors, potentially resulting in increased purchase volumes of shares.

For instance- If you have a share worth $1000, you need to sell that at $1000 per share. However, after a 1:2 stock split, the share price drops to $500. Now, you can sell one share worth $500.

What are Reverse Stock Splits?A reverse stock split is a corporate action where a company reduces the number of outstanding shares by combining them into fewer shares. Instead of getting more shares like in a regular split, investors end up with fewer shares for each one they own. This usually happens when a company's stock price is very low and they want to boost it up.

Example-

Let's say Company XYZ's stock is currently trading at $50 per share and a reverse stock split at a ratio of 1-for-5:

Before the reverse split:

Number of shares outstanding: 10 million

Stock price: $50 per share

Market capitalization:$500 million

After the reverse split-

Number of shares outstanding: 2 million (10 million shares divided by 5)

Stock price: $250 per share ($50 multiplied by 5)

Market capitalization: $500 million (unchanged)

Advantages of Reverse Stock Splits

• Reducing Volatility: Penny stocks, which typically have low prices per share, can experience high volatility and speculative trading. By increasing the stock price through a reverse split, the company may reduce volatility and stabilize its share price.

• Improving Liquidity: Reverse splits can decrease the number of outstanding shares, potentially improving liquidity by reducing the supply of shares available for trading. This can make the stock more attractive to institutional investors and increase trading volume.

• Enhancing Perceived Value: When a company does a reverse stock split, it makes the price of each share go up. This might make people think the company's stock is more valuable. People who like to invest in stocks with higher prices might become interested, and the company's reputation in the market could get better.

Disadvantages of Reverse Stock Splits

• Liquidity Impact: Reverse splits can reduce the number of outstanding shares, which may decrease liquidity in the stock. This can make it harder for investors to buy and sell shares, particularly for smaller investors.

• Risk of Further Decline: If a company's stock price has fallen significantly before the reverse split, there's a risk that the price could continue to decline even after the split. This can result in further losses for investors who own shares in the company.

• Negative Perception: Investors may view reverse stock splits as a sign of financial trouble or poor performance. This negative perception can lead to decreased investor confidence and potentially drive the stock price down further.