"A stock split is a mechanism by which a company can increase or decrease the number of its shares by dividing those shares or combining them. There are two types of stock splits: a forward split and a reverse split. A forward split is the most common, and the type that Carvana is proposing."
"In a forward split, an individual share is divided into additional shares, reducing the value of each share. A forward split is usually just referred to as a 'stock split.' On the other side of the coin, you have a reverse split. These are less common than forward splits. In a reverse split, multiple existing shares of a stock are combined into a single share, making each new share more valuable because there are fewer of them."
Carvana Co., a used-car e-commerce platform, is proposing its first stock split, which requires shareholder approval. A stock split is a corporate mechanism that changes the number of shares outstanding without altering the company's total value. Forward splits, the most common type, divide individual shares into multiple shares, reducing each share's price. Reverse splits, less common, combine multiple shares into one, increasing per-share value. Carvana's proposed forward split will significantly lower the per-share price of CVNA stock while keeping the company's overall value unchanged.
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