What You Need To Know Ahead of Nvidia’s 10-for-1 Stock Split on Friday

June 9, 2024
Paul Svensen

Nvidia’s highly anticipated 10-for-1 stock split is set to take place this Friday, following a period of significant growth for the tech giant. The split aims to make Nvidia’s stock more accessible to a broader range of investors by reducing the price per share, potentially boosting demand and further driving up the stock price.

Key Takeaways

Nvidia’s stock price has surged since the announcement of the 10-for-1 stock split and a blockbuster earnings report last month.
The company’s market capitalization has surpassed $3 trillion, reaching record highs this week.
Shareholders of Nvidia common stock as of market close on Thursday will receive nine additional shares after market close on Friday.
Nvidia’s split-adjusted trading will commence on Monday.
The split is expected to lower Nvidia’s stock price, making it more accessible to a wider range of investors and potentially increasing demand.

How Nvidia’s 10-for-1 Stock Split Will Work

The stock split will affect shareholders of Nvidia common stock as of market close on Thursday. Investors will receive nine additional shares for each share they hold after market close on Friday. The first day of split-adjusted trading will be on Monday.

Post-split, there will be ten times as many shares of Nvidia common stock at a lower price point per share. This adjustment will not impact the total value of investors’ holdings or Nvidia’s market capitalization. For example, if Nvidia shares were trading at around $1,200 before the split, an investor holding one share would hold ten shares priced at $120 each after the split.

Potential Impact on Nvidia Stock

Stock splits can make shares appear more affordable, potentially driving up demand and leading to a rise in the stock price. Historical data suggests that companies often experience gains following a stock split. For instance, Amazon’s 20-for-1 stock split in 2022 saw shares rise in the days following the split.

A stock split can also signal to the market that the company’s stock price has been increasing significantly, which may lead investors to believe that this growth will continue. According to Bank of America research, companies that enact stock splits tend to gain 25% one year later, compared to 12% for the broader index.

Nvidia’s Historical Stock Splits

Nvidia has performed several stock splits in the past, with varying outcomes. The most recent splits occurred in July 2021, September 2007, and April 2006. In the earlier periods, the stock initially fell post-split but then gained in the following months. The 2021 split saw shares gain momentum about a year later, driven by optimism about AI-related revenue.

Future Outlook

While stock splits themselves do not directly cause stock gains or declines, they can influence investor perception and market behavior. Nvidia’s impressive revenue growth and investor optimism about its future in AI are likely to continue driving its stock performance. As the AI market expands, more companies are expected to adopt Nvidia’s products and services, potentially boosting its stock further.

Investors should closely watch Nvidia’s next moves to see if it can maintain its competitive edge in the high-growth AI market. The upcoming stock split is just one of many factors that could influence Nvidia’s future stock performance.