How does a stock split work?

In an N-for-M split you receive N new shares for every M old ones, and the price adjusts by M/N. Value is unchanged: 150 shares × $800 = 600 shares × $200.

What is a reverse split?

A split where you end with fewer, higher-priced shares (e.g. 1-for-10). Companies often use it to lift a low share price; your position value is unchanged.

What happens to my cost basis?

Total cost basis is unchanged; per-share basis scales by the inverse of the ratio. After a 4-for-1, a $400 per-share basis becomes $100.

What about options and fractional shares?

Exchange-listed options are adjusted by the OCC to match the split. Fractional entitlements in reverse splits are usually paid out in cash.

Do splits affect dividends?

The dividend per share adjusts by the same ratio, so total dividend income is unchanged.

Is a stock more likely to rise after a split?

A split itself adds no value; any effect comes from liquidity and attention. Treat post-split performance claims with scepticism.

Stocks & Investing

Stock Split Calculator

Calculate shares owned and price per share after a stock split or reverse split — 4-for-1, 3-for-2, 1-for-10 or any ratio — with cost basis per share.

A stock split exchanges each existing share for a fixed number of new shares, scaling the share count up and the price down by the same ratio while position value stays unchanged.

Shares after split

600

Price after split: $200.00
Position value: $120,000.00
Split type: Forward split

A split never changes the value of the position, only the share count and price.

Worked example

An investor holds 150 shares at $800 and the company does a 4-for-1 split.

New share count: 150 × 4 = 600 shares
New price: $800 ÷ 4 = $200
Position value: 600 × $200 = $120,000 (unchanged)

The position becomes 600 shares at $200 — worth exactly the same $120,000. A 1-for-10 reverse split works the same way in reverse: 500 shares at $0.80 become 50 shares at $8.00.

How this is calculated

An N-for-M split exchanges every M old shares for N new ones:

newShares = shares × N ÷ M
newPrice = price × M ÷ N

The two adjustments cancel exactly, so position value never changes — a 4-for-1 split turns 150 × $800 into 600 × $200, both $120,000. Per-share cost basis scales the same way as the price.

A reverse split (N < M, like 1-for-10) works identically with the ratio inverted: fewer shares at a proportionally higher price.

When to use this calculator

Use this when a holding announces a split and you want the exact post-split share count, price and per-share cost basis — particularly for odd ratios like 3-for-2 where the mental arithmetic is error-prone.

Reverse splits are the more consequential case: a 1-for-10 leaves you with a tenth of the shares at ten times the price, and any fractional remainder is usually cashed out. Check what you will actually hold before the effective date.

It is also useful for cleaning up records: brokers occasionally display pre-split cost bases after a split, and recomputing the adjusted basis keeps your own P&L tracking correct.

Common mistakes

Expecting a split to create value — it changes the share count and price, never the position's worth or the company's market cap.
Forgetting to adjust per-share cost basis after a split, which makes later gain/loss calculations wrong.
Ignoring fractional-share handling in reverse splits — odd lots are often cashed out rather than rounded.

Frequently asked questions

How does a stock split work?: In an N-for-M split you receive N new shares for every M old ones, and the price adjusts by M/N. Value is unchanged: 150 shares × $800 = 600 shares × $200.
What is a reverse split?: A split where you end with fewer, higher-priced shares (e.g. 1-for-10). Companies often use it to lift a low share price; your position value is unchanged.
What happens to my cost basis?: Total cost basis is unchanged; per-share basis scales by the inverse of the ratio. After a 4-for-1, a $400 per-share basis becomes $100.
What about options and fractional shares?: Exchange-listed options are adjusted by the OCC to match the split. Fractional entitlements in reverse splits are usually paid out in cash.
Do splits affect dividends?: The dividend per share adjusts by the same ratio, so total dividend income is unchanged.
Is a stock more likely to rise after a split?: A split itself adds no value; any effect comes from liquidity and attention. Treat post-split performance claims with scepticism.