0

I don't understand what is the different between a 2 for 1 stock split and a 1 for 1 stock split. If you have 100 shares then get a 2 for 1 split you will have 200 shares. If you have 100 shares then get a 1 for 1 split won't you still have 200 shares (100 shares + 100 shares = 200.

user30748
  • 11
  • 1
  • 1
  • 1

3 Answers3

8

There is no such thing as a "one for one" split. It's either N for 1, or 1 for N in a reverse split. And for either, N can't be 1.

Yes a 3:2 can happen, but I still read it as 1.5 for 1.

JoeTaxpayer
  • 172,694
  • 34
  • 299
  • 561
5

I'm guessing you're conflating bonus share issuance with stock split. That seems very common to me, from a quick search; there's even some issues of terminology between the US and Europe, I think - it seems some Europeans may use Bonus Shares to mean Stock Split, as opposed to the more common meaning in the US of Stock Dividend.

Sometimes a bonus share issuance is (incorrectly) called a stock split, like in this public announcement from STADA in 2004. It is a 1:1 bonus share issuance (meaning they issue one bonus share to everyone who has one share now), but it is in essence the same thing as a stock split (a 2:1 stock split, namely). They combined the 1:1 from bonus share with the wording 'split', causing the confusion.

Bonus share issuance, also known as a stock dividend, is covered well in this question/answer on this site, or from a search online. It has no obvious effect initially - both involve doubling shares out there and halving the price - but it has a substantially different treatment in terms of accounting, both to the company and to your tax accountant.

Community
  • 1
Joe
  • 35,939
  • 6
  • 92
  • 129
1

The 1 for 1 split could be the case where a company is being split into two parts. The new part may be spun off, or sold to another company.

Any time a company splits into two parts, the ratio of the resulting companies needs to be determined.

mhoran_psprep
  • 148,961
  • 16
  • 203
  • 418