Definition: When a company declares a stock split, the number of shares of that company increases, but the market cap remains the same. Existing shares split, but the underlying value remains the same. As the number of shares increases, price per share goes down.

Description: Stock split is done to infuse liquidity and to make shares affordable for various investors who could not buy the shares of that company before due to high prices.

People often confuse bonus shares with stock split. Distribution of bonus shares only changes its issued share capital whereas stock split splits the company's authorized share capital.