Stock Split Calculator

What a split changes

Nothing of substance. It changes the units, not the value.

	Before 2-for-1	After
Shares held	100	200
Share price	$600	$300
Position value	$60,000	$60,000
Cost basis per share	$400	$200
Total cost basis	$40,000	$40,000
Your ownership %	Unchanged	Unchanged

Why companies split

• Accessibility. A lower nominal price feels more approachable, though fractional shares have largely removed this constraint.
• Liquidity. More shares outstanding can tighten the bid-ask spread.
• Index eligibility. Some price-weighted indices, the Dow among them, are distorted by very high share prices.
• Signalling. Splits usually follow a period of strong performance, which is why they are often read as management confidence.

That last point explains the persistent belief that splits are bullish. The causation runs backwards: companies split because the price rose a long way, not the other way round.

Reverse splits are a different signal

A reverse split consolidates shares: 1-for-10 turns 1,000 shares at $0.50 into 100 at $5. Again the value is unchanged. But the reason is usually very different.

Exchanges impose minimum share prices, commonly $1 on major US exchanges. A company drifting below that faces delisting, and a reverse split is the fastest way to comply. So while a forward split typically follows success, a reverse split frequently follows sustained decline.

The cost basis point that matters for tax

Your total cost basis never changes in a split. It is redistributed across the new share count, so the per-share figure moves by the same ratio as the price.

Brokers normally adjust this automatically, but it is worth checking after any split, particularly if you transferred the position between brokers. An unadjusted basis will overstate or understate your gain when you eventually sell. If you accumulated the position across several purchases, the stock average calculator gives you the blended figure to adjust.