A stock split is a decision by a company's board of directors to increase the number of shares that are outstanding by issuing more shares to current shareholders.
For example, in a 2-for-1 stock split, an additional share is given for each share held by a shareholder. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split.
A stock's price is also affected by a stock split. After a split, the stock price will be reduced since the number of shares outstanding has increased. In the example of a 2-for-1 split, the share price will be half Thus, although the number of outstanding shares and the price change, the market capitalization remains constant.
Purpose of stock split: -
The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.