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Shares issued by a corporation that equal less than one full share of stock. Fractional shares are often issued in connection with stock-for-stock mergers, stock dividends, reverse stock splits, and other similar corporate actions.
There are no major drawbacks to fractional shares. But it is worth taking into account the fact that this does not really increase profit potential by itself. A larger investment in a single share that goes up in value is of more benefit than a smaller one in multiple stocks that do not go anywhere or that go down.
Some brokers may offer fractional share trading in real time, others may settle all fractional share trades in one or more large orders?which could affect share price, depending on how much the stock price fluctuated throughout the day between order time and trade execution time.
Transferability: If you want to transfer your account or specific share positions to another broker, only whole shares can be transferred. Your fractional shares that cannot be transferred or reorganized will be liquidated at prevailing market prices, and the proceeds will be credited to your account.
The only way to sell fractional shares is through a major brokerage firm, which can join them with other fractional shares until a whole share is attained. If the selling stock does not have a high demand in the marketplace, selling the fractional shares might take longer than hoped.