Benzinga - by Shanthi Rexaline, Benzinga Editor.
Shares of Nvidia Corp. (NASDAQ:NVDA) are trading lower in premarket trading on Monday, towing in line with the sentiment that prevailed in the futures market.
In premarket, the stock was down 0.42% at $120.38, according to Benzinga Pro data. The Nasdaq Composite and S&P 500 futures were down 0.02% and 0.09%, respectively. After hitting a record high on Wednesday, when the company’s market cap breached $3 trillion, the stock has pulled back in the previous two sessions.
Nvidia begins to trade on a split-adjusted basis on Monday following the 10-for-1 stock split that was implemented Friday after the close. A stock split theoretically should not impact a stock’s price, given that no new shares are issued in the process and shareholders’ ownership is not diluted. This corporate action merely makes the shares affordable for retail traders.
With Nvidia’s 10-for-1 split, a Nvidia shareholder will have 10 shares for each share they held before the split but the value of the total holdings remain the same. Essentially, Nvidia’s market capitalization remains the same but the number of outstanding shares varies depending on the split ratio.
Typically, shares see some weakness immediately after the split, potentially due to profit-taking following the pre-split run-up. They normalize thereafter and begin trading in line with fundamentals.
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