A stock split is a corporate action in which a company divides its existing shares into multiple shares to increase liquidity and make the stock more accessible to investors. For example, in a 2-for-1 stock split, each shareholder receives an additional share for every share they already own, effectively cutting the stock price in half. Stock splits do not change the overall value of an investor's holdings, as the total market capitalization remains the same before and after the split. However, stock splits can have a psychological impact, as a lower stock price may attract more retail investors who perceive the stock as more affordable. It's important to note that stock splits do not guarantee future performance and should not be the sole reason for investing in a company. Investors should conduct thorough research on the company's fundamentals, market trends, and financial health before making any investment decisions. Overall, stock splits can be a sign of a company's confidence in its future growth prospects and a way to boost trading activity in the stock. Understanding how stock splits work can help investors navigate the stock market more effectively and make informed investment decisions.