What is a Forward Stock Split?

A forward stock split proportionally issues more shares to present shareholders, increasing a company's share count.

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The split ratio determines how many new shares are issued for each current share, such as a 2-for-1 or 3-for-2 split.

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Since market capitalization remains unchanged, the share price decreases in proportion to the split ratio.

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Companies may pursue splits to push share prices into a more optimal trading range.

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Splits multiply the number of shares outstanding by the split ratio. A 2-for-1 split doubles outstanding shares.

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Though stockholders receive more shares, their proportional ownership stake and voting rights remain the same.

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Metrics like earnings per share (EPS) and book value per share decrease in line with the share price after a split.

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By lowering the share price, splits can stimulate higher liquidity by making shares more accessible to retail investors.

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The ex-date is when the stock begins trading at the new split-adjusted price and terms.

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