A stock split divides a company's existing shares into a larger number of lower-priced units. The total value of a holding does not change — a shareholder simply owns more shares, each worth proportionally less. It is a cosmetic change to the share count, not to the size or value of the business.
Companies usually split to bring a high share price down to a range that feels more accessible to small investors, which can improve liquidity. The split itself creates no new value; the market capitalisation immediately afterwards is identical to immediately before.
A reverse split does the opposite, consolidating many shares into fewer, higher-priced ones. It is often used to lift a very low price back above an exchange's minimum listing requirement, and is sometimes read as a sign of underlying trouble.
Worked example
In a 4-for-1 split, a single $400 share becomes four $100 shares — the same $400 of value, just divided differently.
This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.