Nvidia stock split: Ready For Another Epic Rally?

The highly publicized NVIDIA stock split just happened and there’s quite a bit to unwind about it. We will explore what it means for the company and its investors, as well as the details of the stock split.

The Nvidia stock split has finally taken place and shares are now open for trading. The company announced plans for a stock split a few days ago. It was also expected after the impressive price performance that took place in the last few months, propelling the stock to above $1,200 per share.

Nvidia is currently one the largest tech company in the world. The GPU maker has been experiencing robust growth in the last few months fueled by the AI boom. The company has been manufacturing GPUs used to build AI data centers that support the back-end of the ongoing AI revolution.

What is the Nvidia stock split?

Stock splits are quite a common occurrence in the stock market and Nvidia happens to be the latest stock to undergo such. A stock split is a scenario where a company’s management agrees to split divide shares such that one share can become multiple, usually 3 or more. This usually happens when a share price soars too high, usually above $1,000. The newly conducted Nvidia stock split had a 10:1 ratio which means the value of one share was split into 10.

The implication of the new Nvidia stock split is that an individual that held 1,000 shares for example, will have 10,000 shares post-split. Nvidia’s stock price peaked above $1,200 before the stock split. While the number of shares held by each shareholder will increase tenfold, they still hold the same value.

It is worth noting that the recent Nvidia stock split is not its first rodeo. The company previously conducted multiple stock splits in the past. Here’s a chart demonstrating the past stock splits.

Also read : Boston Dynamics Stock: A Guide to Investing in 2024

Why Did the NVIDIA stock Split happen this week?

Nvidia is simply following the stock split rule book. Its share price was rallying too high hence a split became a viable option. Stock splits usually dilute the perception that price might be too high. This perception might discourage investment and even encourage short sellers to hammer down on a stock price.

A potential reason why Nvidia decided to conduct a stock split is to make room for more investment. Afterall, the stock has more potential upside since the age of AI is only just beginning.

Also Read : Is NVIDIA A Good Stock To Buy in 2024/2025?

How will shareholders benefit from the Nvidia stock split?

Existing shareholders should not expect an immediate benefit. However, the perceived low value could attract more investors in the long run, thus their shares will potentially be worth much more in the coming months or years.

New investors will enjoy the benefit of securing shares at a more attractive price point. However, it is worth noting that the Nvidia stock split itself should not have a direct impact on the stock price in the short term.

How did the market react to the Nvidia stock split?

Nvidia tanked by about 3.4% in the first hour of trading on Monday morning after opening slightly above $120. It hit a low of $117.01 before swiftly bouncing back, pushing well above its opening price for the day. It traded at $122.01 at press time.

It is worth noting that the first day of trading does not necessarily underscore the price performance moving forward. That will depend on multiple factors including GPU demand hence organic growth, and the overall health of the market.

Nvidia stock split Conclusion

Nvidia has successfully concluded its sixth stock price after celebrating a robust first half of 2024. The split could pave the way for more potential gains ahead if it maintains the trajectory we have witnessed in the last few months. The split should not have a major impact in the short run. Post-split trading indicates healthy demand.

Also check out Tesla stock split history: Everything you should know