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Stock and reverse stock splits are corporate events that affect the number of shares in your position. If any security you hold is impacted by a split, it will be automatically adjusted without requiring any action from you.

Stock splits

A stock split increases the number of shares held for a security, while maintaining the overall market value of your holdings. For instance, if you own one share of company ABC, trading at $100 per share and the company declares a 2:1 stock split, you'll now hold two shares priced at $50 each. Your total market value remains $100.

Reverse stock splits

A reverse stock split decreases the number of shares held and increases the price per share. For example, if you own 10 shares of company XYZ, trading at $5 per share and the company declares a 1:2 reverse stock split, you'll hold five shares priced at $10 each. Your total market value remains at $50.

Companies often use splits to adjust share prices either upward or downward.