KEY TAKEAWAYS
- Nvidia announced a 10-for-1 forward stock split along with its blockbuster earnings report Wednesday.
- Stock splits increase the number of shares on the market without changing the company’s valuation or market capitalization.
- Holders of Nvidia common stock as of market close on Thursday, June 6 will receive nine additional shares for each share they hold after market close on Friday, June 7, with split-adjusted trading to begin on Monday, June 10.
- The move will lower Nvidia’s stock price and could make Nvidia stock ownership more accessible to a wider range of investors.
Nvidia (NVDA) announced a 10-for-1 forward stock split along with its blockbuster earnings report Wednesday, in a move that will lower the chipmaker’s stock price and could make ownership more accessible to a wider range of investors.
Nvidia shares soared above $1,000 following the earnings and stock split news, with shares up over 9% at $1,040.55 as of 2:30 p.m. ET Thursday. Ahead of Nvidia’s stock split, analysts suggested the artificial intelligence (AI) chip manufacturer’s stock price could go even higher.
What Nvidia’s 10-for-1 Split Means for Investors
Nvidia’s 10-for-1 stock split means shareholders will get 10 shares for each one they held before the split.
The split will affect shareholders of Nvidia common stock as of market close on Thursday, June 6, with investors receiving nine additional shares after market close on Friday, June 7. Split-adjusted trading will begin on Monday, June 10.
After the split, there will be 10 times as many shares of Nvidia common stock, lowering the price of individual shares without impacting the total value of investors’ Nvidia holdings or the company’s market cap. If Nvidia shares were trading at $1,000 before the split, an investor holding one share before the split would hold 10 shares priced at $100 each after the split.
A Lower Price Could Make the Stock More Accessible
The stock split could help make investing in Nvidia more accessible to a wider range of investors and increase liquidity, as the stock’s price at over $1,000 could discourage some from buying it. Nvidia said the split was “to make stock ownership more accessible to employees and investors.”
Another reason some companies might undergo a stock split is because the lower price could help get them added to an index like the Dow Jones Industrial Average (DJIA). Price-weighted indexes like the Dow tend to avoid adding high-priced stocks as movements in price could have an outsized impact on the index.
The highest-priced stocks in the Dow were UnitedHealth Group (UNH) at $516.51, Goldman Sachs (GS) at $457.94, and Microsoft (MSFT) at $427.37, as of 2:30 p.m. ET Thursday, well below Nvidia’s share price of $1,040.55. Amazon (AMZN) joined the Dow earlier this year after undergoing a 20-for-1 stock split in June 2022.
