DEFINITION of ‘Push Out’
A push out is one of two ways to effect a stock split. In a push out, new share certificates are forwarded to existing shareholders, without it being necessary for them to surrender their previous share certificates. The shares on existing and new certificates have the same new value.
BREAKING DOWN ‘Push Out’
The push out method is less cumbersome and more efficient than the alternative call-in method, which effects a stock split by replacing existing share certificates held by shareholders with new share certificates.
Example of a Push Out
For example, if a company uses the push out method for the stock split, the holder of 500 shares in a company that has declared a 2-for-1 split will receive another share certificate for 500 shares. The 500 shares on both the old and new share certificates will have identical value.
The stock split method, push out or call-in, do not affect a security’s value. They are purely an administrative technique to carry out a stock split.