About stock split. What is stock split? Get here A to Z information about it.

All the big and small investors in the stock market try to earn profits by investing money. On the other hand, it is very difficult for new people to earn through this. Some share holders even become paupers after investing in it. Actually this happens when some companies go into loss. On the other hand, the existing shareholders keep holding the stocks with them. Only when the right time comes, they are able to earn profits through it. Before investing in it, definitely know about stock split.

what is a stock split

A stock split is a very simple concept.Shareholders typically hold a variety of stocks.When times are bad, some companies start lowering the price of their stock.
The stock is then purchased by new investors.Stock splits, on the other hand, are used to protect existing shareholders.The old shareholders do not suffer a loss as a result of the decrease in its value.

How shareholders can take advantage of stock split

Companies allot a certain number of shares to existing shareholders who own the stock.This usually occurs when the price is low.So the question is, how will the existing shareholders benefit?In fact, as soon as its price is reduced, new investors begin purchasing it.It has no bearing on the existing shareholders.Following that, when the value of the stocks rises, both parties profit.

Who is eligible for stock split

Once the per share price is low, only the companies determine who is eligible for a stock split.Those who purchased it within the last day or two are eligible.
That means that those who purchase the shares on the day of the split will not benefit.Not only that, but after becoming profitable, many companies can repurchase their stock through a reverse split.