A stock split is when a company decides to split its shares from a smaller number to a larger number. It does not dilute the share in any sense. For instance a split of 2 for 1 would mean that for every 1 share held, you will have 2 after the split. And if a share holder owns 1 share at $100, after the split it becomes 2 shares at $50.
It is wrongly perceived that the shareholder will gain because of many reasons such as the shareholder has more units of the share or since the price has been reduced, it is bound to keep rising again. These examples are definitely not the case because even though there is a split, the change in price of the share ultimately depends on the performance of the share and not a gimmick like this.
So please beware when your advisor tells you that the share is going to have a stock split, therefore buy buy buy. In that case, leave the advisor for he/she does not know what he/she is talking about
It is wrongly perceived that the shareholder will gain because of many reasons such as the shareholder has more units of the share or since the price has been reduced, it is bound to keep rising again. These examples are definitely not the case because even though there is a split, the change in price of the share ultimately depends on the performance of the share and not a gimmick like this.
So please beware when your advisor tells you that the share is going to have a stock split, therefore buy buy buy. In that case, leave the advisor for he/she does not know what he/she is talking about
