Nvidia is gearing up for a major financial event this week with its 10-for-1 stock split, which could significantly influence investor behavior and the company’s market performance.
Key Takeaways:
- Nvidia’s stock price has surged since the announcement of the 10-for-1 stock split and the release of a blockbuster earnings report last month.
- The company’s stock price hit a record high this week, pushing Nvidia’s market capitalization above the $3 trillion mark.
- The 10-for-1 forward stock split will affect shareholders of Nvidia common stock as of the market close on Thursday. Investors will receive nine additional shares after the market closes on Friday.
- Nvidia’s split-adjusted trading will commence on Monday.
- The stock split will lower Nvidia’s stock price, making it more accessible to a broader range of investors, potentially boosting demand.
Nvidia’s Stock Surge and Impending Split
Nvidia’s (NVDA) stock price has continued to climb since the announcement of its 10-for-1 stock split and a stellar earnings report last month. This surge has pushed Nvidia’s market capitalization past the $3 trillion mark just ahead of the split on Friday.
How Nvidia’s 10-for-1 Stock Split Will Work
The split will affect shareholders of Nvidia common stock as of the market close on Thursday. Investors will receive nine additional shares after the market closes on Friday. The first day of split-adjusted trading for Nvidia will be Monday.
Post-split, there will be ten times as many shares of Nvidia common stock available at a lower price per share. This adjustment will not impact the total value of investors’ Nvidia holdings or the company’s market cap. 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. This lower price point could make Nvidia stock ownership more accessible to a wider range of investors.
What Could Happen to Nvidia Stock After the Split
After a stock split, some investors may view the stock’s price as more affordable and decide to buy, driving up demand and potentially leading to a rise in the stock’s price. For instance, when Amazon (AMZN) executed a 20-for-1 stock split in 2022, shares rose in the days following the split.
A stock split can also signal to the market that the company’s stock price has been increasing enough to justify the move, potentially indicating continued growth. Bank of America research suggests that historically, stock splits are bullish for companies that enact them, with gains of 25% one year later compared to 12% for the broad index.
Potential Index Inclusion
The split could also enhance Nvidia’s chances of joining an index like the Dow Jones Industrial Average (DJIA). Price-weighted indexes like the Dow tend to avoid adding high-priced stocks due to the outsized impact their price movements can have on the index.
As of Thursday, the highest-priced stocks in the Dow were UnitedHealth Group (UNH) at $498.78, Goldman Sachs (GS) at $459.62, and Microsoft (MSFT) at $423.13, all well below Nvidia’s pre-split price of $1,199.33. Amazon joined the Dow earlier this year following its 2022 split.
Inclusion in a major index can further fuel share gains by boosting name recognition among investors and prompting mutual funds and exchange-traded funds (ETFs) that mirror the index to add Nvidia to their holdings.
Disclaimer: The information presented in this article is based on the available data and current events around the time of publication, to the best of our staff research and knowledge. It is intended for educational and informational purposes only, and should not be construed as professional advice, financial advice, sportsbetting advice, or life advice. It is simply our best guess, something to add to your research. We at Las Vegas Top Picks do our best to get stories accurate, but sometimes mistakes and biases happen, and it is always good to double-check other sources and media outlets to confirm stories and the factual details. The opinions expressed in this article do not necessarily reflect the overall opinion of Las Vegas Top Picks.
