Last month, leading retailer (NYSE: WMT) announced that it would conduct a 3-for-1 stock split on Feb. 23. In recent years, investors have a seen a number of high-profile tech companies such as Alphabet, Amazon, and Tesla conduct stock splits. However, this is Walmart's first split in over two decades. It last completed a stock split back in 1999.

Let's dig into how stock splits work and what investors should understand before pouring into Walmart stock.

The dynamics of stock splits are quite simple: The number of shares rises by the split ratio, while the stock price drops by the same multiple. For example, following Walmart's 3-for-1 split, shareholders will have triple the amount of shares they held previously. But the price of those shares will be at one-third their original value.

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Source Fool.com