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Nvidia Stock Split: What Investors Need To Know, What Past History Shows, What's Next For Chip Giant

Published 07/06/2024, 17:26
Updated 07/06/2024, 18:41
© Reuters Nvidia Stock Split: What Investors Need To Know, What Past History Shows, What\'s Next For Chip Giant
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Benzinga - by Chris Katje, Benzinga Staff Writer.

Shares of semiconductor giant NVIDIA Corporation (NASDAQ:NVDA) are splitting 10-for-1 on Friday after market close.

The Santa Clara, California-based company announced the move during its recent quarterly earnings report.

The Nvidia stock split will make shares more accessible to employees and investors. Shares will trade on a split-adjusted basis beginning Monday, June 10.

Investors will have 10 shares of NVDA for every one share they own when the market opens on Monday. Nvidia share price will also be a tenth of the closing value on Friday.

Nvidia’s overall value is not expected to change. However, the stock could be volatile next week. Options will likely be impacted and investors who don't like owning partial shares of a company will be more likely to accumulate whole shares of Nvidia.

This isn’t the first time Nvidia split shares. The other stock splits from the company were 4-for-1 (2021), 3-for-2 (2007), 2-for-1 (2006), 2-for-1 (2001) and 2-for-1 (2000).

The 10-for-1 split marks the largest in the company’s history.

Related Link: When Will Nvidia Be The Most Valuable Company In The World?

Past Stock Splits: Nvidia’s previous stock splits failed to excite investors and immediate returns were minimal.

  • 2021: The stock split saw shares open for trading at a split-adjusted $187.30 on July 20, 2021. Shares gained 11.5% in value in their first month. They were down 5.2% in the one-year trading period after the split.
  • 2007: Shares opened for trading at a split-adjusted $8.57 on Sept. 11, 2007; they gained 2.9% in their first month and fell 69.9% in their first year after the split.
  • 2006: Shares opened for trading at a split-adjusted $5.08 on April 7, 2006. They gained 2.6% in their first month and were up 1.4% in their first year of trading after the split.
  • The past three Nvidia stock splits have seen shares post small gains in the month after the split and trade down one year later or up marginally.
Nvidia in the long-term is one of the strongest stocks in the market over the last five and 10 years. The short-term performance post-split could serve as a word of caution to investors on the optimism for the latest stock split.

What's Next: The split could be a precursor to the stock’s inclusion in the Dow Jones Industrial Average Index, Freedom Capital Markets Chief Strategist Jay Woods told Benzinga.

"Price wise shares are at that elevated level where they have announced a split in the past. Rumor wise, a stock split would make shares more attractive to be added to the Dow Jones Industrial Average," Woods said.

Nvidia could replace Intel Corporation in the Dow Jones Industrial Average, which is tracked by the SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA).

"When you're the face of the next wave of growth in technology, that being AI, that being the chipmaker, that to me says you should be represented in the Dow Jones Industrial Average."

PreMarketPrep co-host Dennis Dick predicted the stock split ahead of earnings and also said that Nvidia replacing Intel is the logical switch.

"I'd expect this announcement sometime in the summer. I don't think it's a matter of ‘if' NVDA goes into the Dow, I think it's now a matter of ‘when,'" Dick told Benzinga.

The stock split by Nvidia with shares trading at the adjusted price Monday could steal some thunder from Apple Inc. The technology giant is hosting its WWDC event beginning Monday.

Nvidia recently briefly passed Apple as the second-largest company in the world.

Likewise, Apple could take some of the spotlight away from Nvidia. Wedbush analyst Daniel Ives expects the Street will be “laser focused” on Apple's artificial intelligence (AI) initiatives.

NVDA Price Action: Nvidia shares are down 2% to $1,191.36 at last check Friday. The stock has a 52-week trading range of $385.67 to $1,255.87.

Read Next: Jensen Huang’s Wealth Soars In 2024: How Much More He Needs To Surpass Warren Buffett, Enter World’s Top 10 Richest

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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