End-of-day data for stocks has, among others, two values that shouldnâ€™t be confused with each other: close and adjusted close. This article will explain the difference between the two and the need to have both of these.

The close (of the OHLC, open-high-low-close) is more or less straightforward: the closing price of a stock that was registered at the end of the period. And for end of day data, it’s the trading day. Itâ€™s a raw value, and it shows just how much raw cash a stock cost at the end of the day. It does just that: tells how much a stock cost at a given date.

This value, though, cannot be used to compare all the prices of a stock to during its entire lifetime directly to each other – because, during the lifetime, there most certainly have been corporate actions that affected the price of the stock. Two primaries of those are splits and dividends. To compare stock prices during the stockâ€™s lifetime, prices need to be adjusted to get the value of adjusted close – retroactively. This means prices get adjusted back in time from the date when an affecting event occurred.

A stock split is an event of a companyâ€™s owners deciding to multiply the amount of company stock traded on the market to make each individual stock â€ścheaperâ€ť and more accessible. To do so, existing stock is split according to the ownersâ€™ wishes – 2 to 1, 3 to 1, 10 to 1, etc. With the companyâ€™s market capitalization intact. It means that a shareholder now has 2 (3, 10) times more stock on their hands. But the price of each is 2 (3, 10) times lower. A stock that cost \$60 will now cost \$30 (20, 6) – and that will be its adjusted price.

Thereâ€™s also a Reverse Stock Split which is, essentially, a stock merge. E.g. 2 stocks are merged into 1, and if a stockholder had 2 shares that cost \$30 each, they will instead have 1 share that costs \$60.

In the following example for AAPL (Apple Inc) we see that there was a split 1:7 in June 2014. The difference between OHLC data is around 7 while adjusted closes are smooth: