Stock Split Calculator
Adjust your shares and cost basis after forward or reverse stock splits
Calculate Split Adjustment
Enter your pre-split position and the split ratio to see your adjusted holdings
Split Ratio
Example: For a 2-for-1 split, enter 2 and 1. For a 1-for-5 reverse split, enter 1 and 5.
What is a Stock Split?
A stock split divides existing shares into multiple shares to reduce the trading price per share. Companies do this to make shares more affordable for retail investors without changing the total market value of the company.
Types of Stock Splits
Forward Split (e.g., 2-for-1, 3-for-2)
Increases the number of shares while proportionally decreasing the price per share. For example, in a 2-for-1 split, each share becomes 2 shares worth half the original price.
Reverse Split (e.g., 1-for-5, 1-for-10)
Decreases the number of shares while proportionally increasing the price per share. Companies do this to meet minimum stock price requirements for exchange listings.
How Splits Affect Your Investment
- Your total investment value remains the same
- Your percentage ownership of the company stays constant
- Your cost basis per share is adjusted proportionally
- For tax purposes, track your adjusted cost basis
Examples
2-for-1 Forward Split
Before: 100 shares @ $150 = $15,000
After: 200 shares @ $75 = $15,000
1-for-5 Reverse Split
Before: 500 shares @ $2 = $1,000
After: 100 shares @ $10 = $1,000
Why Companies Split Stocks
High share prices can deter retail investors. When Tesla traded at $2,000 per share, many individual investors couldn't afford even one share. After a 5-for-1 split, shares cost $400 - far more accessible. The company's value didn't change, but more people could invest.
Forward splits signal confidence. Management believes the stock will keep rising, so they make it accessible to more buyers. Markets often react positively to split announcements, though the fundamental value remains unchanged.
Reverse Splits: Warning Signs
Reverse splits often precede trouble. Companies use them to avoid delisting from major exchanges, which require minimum share prices (usually $1). If a stock trades at $0.40, a 1-for-5 reverse split brings it to $2.00 - buying time to improve performance.
However, reverse splits don't fix underlying problems. If the company continues losing money, the stock price will fall again. View reverse splits as red flags requiring extra research before investing.
Tax Implications
Stock splits are non-taxable events. Your cost basis per share adjusts proportionally, but your total investment remains the same. If you bought 100 shares at $50 (total basis: $5,000) and they split 2-for-1, you now own 200 shares with a $25 cost basis each. Total basis: still $5,000.
Always track your adjusted cost basis for tax purposes. When you eventually sell, you'll need this number to calculate capital gains. Use our Capital Gains Tax Calculator to estimate your tax liability.
Frequently Asked Questions
Does a stock split change my investment value?
No, stock splits do not change your total investment value. While your share count and price per share change, your total market value and percentage ownership remain the same. It's a non-taxable event that simply adjusts the numbers.
What's the difference between forward and reverse splits?
Forward splits (like 2-for-1) increase share count and decrease price per share, often signaling company confidence. Reverse splits (like 1-for-5) decrease share count and increase price per share, often used to meet minimum exchange listing requirements.
How do I adjust my cost basis after a stock split?
Divide your original cost basis by the split multiplier. For a 2-for-1 split, if you bought shares at $100, your new cost basis is $50 per share. Track this adjusted basis for accurate tax reporting when you sell.