Forward Split
Categories: Company Valuation, Company Management, Accounting, Stocks, Metrics
A forward split occurs when a stock splits so that the shareholders own more shares after the split than before.
A 2:1 split is an example of a forward split; your holdings double in size. If you owned 100 shares before the split, after the split, you will own 200 (each share will become two).
Just remember that the company isn't worth any more after the split. For your shares to be worth more, the pie has to grow. All that a split does is cut the same pie into more slices.
Why would a company want to forward split shares if the price isn't going to be affected? If the stock prices are high, a stock split can mean that each individual share is less expensive, so more people can afford to buy. The more people buy, the better for the company. With more people buying, there's more interest in the stock, which means more trading and a better stock price.
Win win.