When does a forward split happen

A forward split typically occurs when a company's board of directors decides to increase the number of outstanding shares by dividing each existing share, often to make the shares more affordable for small investors or to increase liquidity. The timing of a forward split can vary, but it is generally initiated as part of a strategic plan to enhance the company's market position and attractiveness to investors. Here are some key points to consider regarding the timing of forward splits: 1. **Market Price Consideration**: Forward splits are often implemented when the share price is deemed too high for the average investor, serving as a mechanism to lower the entry price and broaden the shareholder base. 2. **Strategic Planning**: Companies may choose to conduct forward splits as part of their strategic planning to adjust the share price to a level that is more conducive to long-term growth and market liquidity. 3. **Liquidity and Trading Activity**: Forward splits can increase liquidity by introducing more shares into circulation, potentially leading to higher trading volumes and a narrower bid-ask spread. 4. **Psychological Impact**: The perception of a forward split as a positive signal about the company's future prospects can stimulate demand and potentially drive up the stock price in the short term. 5. **Shareholder Impact**: For existing shareholders, the value of their investment remains unchanged; the post-split shares will be priced at a lower net asset value (NAV) per share, but the total value of their holdings will not differ. In summary, a forward split is a deliberate action by a company's board to adjust the share price and enhance the company's marketability, which is typically initiated when the share price is considered too high for the average investor or when strategic adjustments to liquidity and shareholder base are deemed necessary.