# How does an enlarged share base affect share price?

If a company has 100 million shares in circulation, each is trading at 5 dollars and has earnings per share at 25 cents, announces a 1 for 1 stock split (so there will be 200 million shares after the stock split), everything will be divided by half. So now there will be 200 million shares in circulation, each share trading at 2.50 dollars and has earnings per share at 12.5 cents.

Why do companies do a share split? What is the difference between the company having 100 million, or 200 million shares in circulation? Because if the company splits the shares, we have more shares but the share price and earnings per share etc.. will decrease by half. Are there any reasons to do a share split, apart from making the share price go down?

How does it affect the company's future stock price, now that it has 200 million shares in circulation?

Say 5 years from now, all else being equal, if the company has 100 million shares in circulation and the share price is \$15 per share, from my point of logic the company's share price will be \$7.50 if it had split the shares 5 years previously and has 200 million shares in circulation. Is that the case in real life situations? In general, would the share price tend to be \$7.50, higher than \$7.50 or lower than \$7.50 if the company splits the shares/has a larger share base?