How do stock splits work?

Question

How do they work? Why is it generally good that a company does a stock split? If a pending split is announced, why does every start buying instead of waiting?

Let’s say there’s a company with shares at $100 and they do a 4 to 1 split, and I happen to own 10 shares. ($1000 value)

Do my shares multiply by 4? Does the value stay the same per share? Or the same for my total share? IE: I now have 40 shares, but their value dropped to $25 each, meaning I still have $1000 worth.

In: 1

Answer 1

You have technically have the same value, but your shares would now be 40. This usually implies that a company is doing well and they want to increase their liquidity.