Nvidia is set to execute a 10-for-1 stock split after Friday’s market close, which was announced last month as part of its quarterly earnings report. This move will significantly decrease the value of each share, with shares trading at their new post-split price beginning next Monday. Nvidia shareholders will receive nine additional shares for each share they owned prior to the split, resulting in a share price of around $114, down from its current $1,140. However, the actual value of the company does not change with a stock split, as the issuance of new shares is proportional.
Stock splits were historically done to make shares more accessible to investors, but with fractional trading, it is now more of a procedural move. Nvidia is the eighth company to announce a stock split this year, following in the footsteps of tech giants like Alphabet, Amazon, and Tesla. The company’s stock price has soared due to the demand for its GPUs, which power AI technology. Companies often see a boost in stock performance after a split, with returns averaging 18% in the 12 months following the move since 2010, outperforming the S&P 500.
Even after the stock split, Nvidia’s shares will be more expensive than they were four years ago when they were priced at $88 per share. The company’s market value has skyrocketed from around $220 billion to $2.8 trillion over the past four years, making it one of the largest companies in the world behind Microsoft and Apple. Investors are curious to see if Nvidia’s lower share price will lead to its inclusion in the Dow Jones Industrial Average, which is known for excluding companies with high-priced tickers.
Shares of Nvidia rose nearly 4% following the announcement of its new line of AI processors, nearing its all-time high set last week. The stock has seen significant gains in May, with at least a 3% daily increase over six days. The market is closely watching how the stock split will impact Nvidia’s performance moving forward, as well as its potential inclusion in the Dow Jones Industrial Average. Overall, the stock split is seen as a positive move for Nvidia and its shareholders, potentially leading to an increase in the company’s value and market performance in the future.
