2 for 1 stock split
Here we will explain what a 2 for 1 stock split means and show you an example of a 2 for 1 stock split. In addition, we will also provide you with a 2 for 1 stock split calculator.
A 2 for 1 stock split or 2:1 stock split ratio can be converted into a 2/1 fraction. Since a 2/1 fraction is greater than 1, it means that a 2 for 1 stock split increases the number of shares of a company. This is called a forward stock split.
More specifically, a 2 for 1 stock split means that you get 2 stocks for every 1 stock you own. In other words, every 1 share is replaced by 2 shares. Therefore, the number of shares owned by each shareholder will increase by 100 percent.
To calculate how many shares you get after a 2 for 1 stock split, you multiply the stock ratio of 2/1 by the number of shares you currently own.
For example, let's say that a company announced a 2 for 1 stock split, and you happen to own 1000 shares in this company. The following equation calculates how many shares you would get after the stock split:
(2/1) × 1000 = 2000
You now have 2000 shares instead of 1000 shares. Note that only the number of shares you have in the company changed, not the market value of the company. Therefore, the market price for each share probably went down proportionally.
To estimate the price of each share after the split, you divide the total market value of your shares prior to the split by how many shares you have after the split. Here is the math, assuming that the price per share was $10 before the split:
(1000 × $10) ÷ 2000 = $5.00
Note: In scenarios where the number of new shares is not a whole number, you may receive monetary compensation instead of a fractional share.
In the boxes below, please enter the market price per share and the number of shares you own prior to the 2 for 1 stock split.
As you can see, the 2 for 1 stock split calculator above calculates the new number of shares, the estimated new market price of each share, and the total value of your investment.
Stock Split Calculators
Use the tool below to get information and a calculator for another stock split.
2 for 3 stock split
Here is information about another stock split that you may find interesting.