What does a split mean for Nvidia?
NVIDIA (NVDA) will undergo a 10-for-1 stock split on June 7th, making the stock more affordable. While a stock split doesn't affect the company's overall market value - since the lower price is balanced by an increase in shares - it does enhance the stock's liquidity. This increase in liquidity means the stock can be bought or sold more quickly, as it becomes accessible to a broader range of market participants.
Nvidia‘s 10-for-1 Stock Split Announcement Effect
Since Nvidia announced its stock split plan on May 22, the company's stock price has soared by 28.26%, surpassing the $1,200 mark. Notably, Nvidia joined the $3 trillion market cap club yesterday, becoming the second-most valuable public company in the U.S., overtaking Apple Inc.
Although the stock split won't affect Nvidia's fundamentals, it is likely to boost investor enthusiasm and drive the stock's momentum even further. The stock price reduction due to the stock split lowers the barrier for many investors to purchase Nvidia, which may encourage retail investors to increase their purchases, leading to a stronger short-term momentum in the stock price. It is recommended that everyone pays attention to price and volume indicators; the continuous rise in stock price and turnover is the most important indicator of momentum trends.
In addition, Nvidia continues to dominate the AI chip market, with major financial institutions continually raising their price targets. However, increasing competition in the AI chip industry could allow other companies to capture market share, potentially impacting Nvidia's long-term profitability.
Key timeline for Nvidia's stock split
- June 6, 2024: Each holder of common stock will be granted additional shares at the close of the market.
- June 7, 2024: The additional shares will be distributed after the market closes.
- June 10, 2024: Nvidia is expected to begin trading on a split-adjusted basis.
To learn more about the stock split, click here: Everything You Need to Know About Stock Split and Reverse Stock Split
