Friday Jun 7 2024 14:14
5 min
Nvidia is implementing a 10-for-1 stock split for investors who held NVDA shares as of the close of trading on Thursday.
These shareholders will receive nine additional shares for each share they own after the market closes on Friday. Trading on a split-adjusted basis will begin on Monday.
The decision follows last month’s impressive Nvidia earnings report, with the company saying the Nvidia stock split aims to “make stock ownership more accessible to employees and investors.”
Nvidia shares have more than doubled this year, driven by the company's chips, which are crucial to the rise of artificial intelligence technology, impacting nearly every major industry. The stock had already more than tripled last year.
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The split will lower the stock price and increase the share count but will not affect the company’s market valuation. Shareholders will retain the same voting rights and will continue to receive dividend payments. Nvidia recently raised its dividend to 10 cents per share, which will translate to one cent per share post-split.
This move spreads the company’s value over a larger number of shares. For example, if shares were trading at about $1,200 each, they are expected to be around $120 each after the Nvidia stock split. Data providers typically adjust for splits to prevent distortions in long-term stock performance calculations.
While stock splits do not fundamentally change a company's value, research cited by The Wall Street Journal suggests they can lead to a short-term price increase as investors generally anticipate higher demand for the stock.
The Nvidia market cap crossed the $3 trillion mark after Tesla CEO Elon Musk announced on X (formerly known as Twitter) that the electric car maker is likely spending between $3-4 billion on Nvidia hardware this year, accounting for approximately 30-40% of Tesla’s artificial intelligence spending.
This order announcement follows Nvidia’s strong first-quarter earnings report, which showed a more than 260% increase in revenue compared to the first quarter of 2023. Data center revenue surged 427% from the previous year to $22.6 billion, driven by demand for generative AI training, according to the company.
"The next industrial revolution has begun," Jensen Huang, Nvidia founder and CEO, exclaimed in a May press release announcing first quarter results. He added:
"Companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center − AI factories − to produce a new commodity: artificial intelligence."
With its market cap now over $3tn, Nvidia is the third three-trillion-dollar company in the U.S., ahead of Apple and behind Microsoft.
Nvidia stock closed at $1,209.98 per share on Thursday.
Had the Nvidia stock split occurred on Thursday, its value would have been $120.98 per share. Since the announcement of the stock split in May, the ticker has risen nearly 30% up to the close of trading on Thursday.
At the time of writing on Friday, June 7, Nvidia stock traded around the $1,191.42 mark, having slipped 1.5% in early trading.
Nvidia shares are up by over 140% year-to-date. On a 12-month basis, NVDA has gained over 208%. In contrast, the S&P 500 index has risen by 12%, while the Dow Jones Industrial Average (DJIA) has grown by a little over 3%.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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