Apple and Tesla Are Splitting Their Stocks: What It Means

You've seen the headlines: Both Apple (NASDAQ: AAPL) and Tesla (NASDAQ: TSLA) are splitting their stocks at the end of August. If you've taken a peek into how Apple and Tesla's share prices have risen since their respective stock split announcements, you might get the feeling that stock splits are a big deal. But that's not entirely accurate.

A stock split is the conversion of one stock share into multiple stock shares according to a set ratio. That ratio, called the split ratio, is commonly 2-for-1 or 3-for-1. In a 2-for-1 split, the company doubles the total number of shares outstanding, and shareholders end up with two shares for every one owned prior to the split. In turn, each individual share should be worth 50% less after the split.

Image source: Getty Images.

Continue reading

Source Fool.com