How to Calculate the Cost Per Share After a Stock Split
A stock is the smallest form of ownership for a company. An investor can buy any number of shares of stock. The value of his stake in the company is the current price of one share times the number of shares owned. Sometimes companies will decide to split their stock. In this case, the number of shares must be adjusted to account for the stock split, however, the value of the total shares remains the same.
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Instructions
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Determine the number of shares you own. You can look at your last portfolio statement or contact your stockbroker. Let's say you own 100 shares of stock XYZ.
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Determine the share price of stock XYZ. You can look this up on your favorite investment research site or by contacting your stockbroker. Let's say the current stock price of XYZ is $10 per share.
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Determine the current value of the shares you own. The value of shares owned is calculated by multiplying the number of shares owned by the current stock price. The value of your shares for this example is $10 multiplied by 100 or $1,000.
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Calculate the number of shares you own with a stock split. There are several different ways a company will split its stock. The most common way is 2 for 1, however, a company may opt for a 3 for 1 or 4 for 1 stock split. A 2 for 1 stock split means that the investor will receive 2 shares of stock for every 1 share he already owns. In a 3 for 1 stock split the investor will be issued 3 shares for every 1 share he owns and so forth. Multiply the current number of shares owned by the number of shares you will receive. For instance, a 2 for 1 stock split will leave the investor with 200 (2 * 100) shares of stock. A 3 for 1 stock split will leave the investor with 300 (3 * 100) shares of stock.
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Determine the value of each share. To determine the value or cost per share divide the current value of 1 share by the number of shares issued to the investor per the stock split. In a 2 for 1 stock split, divide the current price by 2. In this example the calculation is $10 divided by 2 or $5. In a 3 for 1 stock split, divide the current price by 3 and so on. The calculation in this example is $10 divided by 3 or $3.33.
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