In a two-for-one split, current shareholders will own twice as many shares as they did before the split by simply splitting the current share price in half. Each old share will be worth exactly two new shares. A novice investor may feel more comfortable investing $3,000 to acquire 100 shares at $30 per share. The investor could have bought 50 shares before the split for the same investment of $3,000 and still hold the same stake in the company's stock. New investors' interest will push the share price higher, which is good news for current shareholders. Therefore, market capitalization is crucial. The split will not impact the company's market value. A $3,000 investment will still represent 0.001% of the company after the split.

Stock splits occur when a company decides to divide its existing shares into multiple shares, effectively reducing the price per share while increasing the number of shares outstanding. For instance, in a 2-for-1 split, each shareholder receives an additional share for every share they own, effectively doubling the number of shares they hold. While the total value of the investment remains unchanged, the lower per-share price may attract more investors. Stock splits are often seen as a sign of confidence from the company's management in its future prospects. They aim to make shares more accessible and liquid without altering the company's market capitalization.