Why companies do it
Companies typically carry out stock splits to bring down the trading unit price of a stock that has become too expensive, making it easier for more investors to buy and sell. For example, if one share is split into two, the number of shares outstanding doubles, and in theory the share price falls to half its pre-split level.
What to keep in mind
Because the total assets and profits the company holds and generates do not change before and after the split, the company's underlying value does not increase or decrease. While EPS and BPS shrink in proportion to the split ratio, multiple-based metrics such as PER and PBR remain theoretically unchanged. The effect of a split announcement on the share price varies by stock and circumstance, so there is no single, guaranteed pattern.