Whenever a company announces plans for a stock split, the market generally cheers the news -- but why?

Technically, a stock split only divides shares into smaller ownership stakes of the company -- like a cutting pie into more slices, it doesn't change anything about the overall size of the pie, nor the value of the company. Still, these financial maneuvers can serve a purpose. By increasing the share count and lowering the share price, they can make it easier for retail investors to buy or sell the stock.

Market high-flyers Nvidia and split their stocks earlier this year after their respective share prices soared to more than $1,000.

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Source Fool.com