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Stock split

 

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A stock split is a type of corporate action that replaces shares in a public company with more shares in the same company. Although this leaves the market valuation of the company the same, an increase in the number of shares leads to greater liquidity, and therefore a greater volume of trades. This often leads to a higher stock price in the short term.

The reverse stock split, or consolidation, is not as common. It can be used by a company to drive up the raw price of the shares, while leaving the valuation the same. This is used when a company's share price drops into the pennies, which makes it disappear from many financial companies' radar.

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