What is a stock split and why is it done?

A stock split is a corporate action where a company divides its existing shares into multiple new shares, increasing the total number of shares while reducing the price per share proportionately. For example, in a 2-for-1 split, each shareholder receives an additional share for every share they own, halving the share price. Companies typically do this to make their stock more affordable for a wider range of investors, improve liquidity, and potentially enhance marketability. Stock splits do not change the overall market capitalization of the company.