How To Tell When Stocks Will Split

When a company decides to change the number of shares it has available on the market, it can do one of two things--either decrease the number of shares available or increase the number of shares available. The latter is referred to as a stock split and the former is referred to as a reverse stock split. Stock splits do not affect the intrinsic value or past performance of a stock, they simply change the value of the new shares created. The challenge is finding out when the split is supposed to occur--you can do this by looking up the "record date."

Review a typical stock split. It is not uncommon for a company to announce a 2-for-1 stock split. This means that a stock trading at $10 per share will be cut in half or "split" and will now be the equivalent of 2 shares of stock at $5 per share. Other common splits are 3-for-2, 5-for-4 or 3-for-1.

Look up the "record date" for stock splits. When a company announces a stock split, it will post a "record date." This means nothing to the stockholder in terms of action; it serves only as an announcement to notify stockholders of an upcoming split. You can find this information in the Form 8(k) submitted by the company to the Securities and Exchange Commission for stock events.

Sign up for alerts or announcements directly from the company. Go to the company website. Click "Investor Relations." You will be able to look up press release information related to the company's stock as well as contact information for inquiries.

Submit a request to the email address listed for Investor Relations to notify you of future stock splits on the "record date," not the "effective date." The effective date is the date on which the stock split will actually occur. Most companies have an automatic alert set up for those interested in the stock as well as current stockholders.