A stock split increases the number of shares outstanding and reduces the price proportionally. The company is unchanged, and so is each holder's proportional ownership.
The arithmetic is neutral by construction
A holder of a given number of shares receives more shares at a proportionally lower price. The total value of the holding immediately after is the same as immediately before.
The company's total market value is unaffected, since nothing about its assets, earnings or prospects has changed.
Per-share figures such as earnings and dividends are restated in the same proportion, which keeps ratios consistent. Historical price charts are adjusted for the same reason, so the series remains comparable.
Nothing about the underlying business is touched by the transaction. The company issues no new capital and receives none, which distinguishes a split from any form of share issuance.
Accessibility is the practical effect
A high share price can make it difficult to buy small quantities or to build a position in precise amounts, particularly where fractional trading is unavailable.
Lowering the price per share widens the range of participants who can transact conveniently, which can increase trading activity.
Fractional share trading has reduced the force of this argument considerably, which is part of why splits have become less common in some markets.
Index membership can be affected
Most indices weight constituents by market value, so a split changes nothing. A small number weight by share price instead.
In a price-weighted index, a split reduces a company's influence directly, since its weight depends on the price rather than the total value.
This is a mechanical consequence of the index construction rather than any statement about the company.
The signal is separate from the mechanics
Splits usually follow a sustained rise in price, so they tend to occur at companies that have performed well. The association is with the past rather than the future.
Announcements sometimes attract attention and short-term price movement, which reflects response to the news rather than any change in value.
Treating a split as evidence about prospects confuses the reason it became possible with a prediction about what follows.
Reverse splits work the other way
A reverse split consolidates shares into fewer, higher-priced units. The arithmetic is equally neutral.
These are often undertaken to meet a listing requirement with a minimum price, which is why they carry a different association from ordinary splits.
Neither direction alters what the holder owns, which is a proportional claim on the same underlying business.