A stock split is when a company increases the number of its shares outstanding in order to increase the liquidity of the shares.
Although the number of shares outstanding increases, the total market capitalization of the company does not change because the price of each share is also divided.
The most common split ratios are 2-to-1 or 3-to-1, which means that each individual share before the split will become multiple shares after the split.
The company decides to conduct a stock split in order to deliberately lower the price of one share, making the company’s shares more accessible without losing value.
A reverse share split is a reverse transaction in which the company does not increase, but reduces the number of shares in circulation, respectively raising the share price.