A Comprehensive Analysis of NVIDIA's Stock Split: Plan, Impact, and Investment Guide

NVIDIA, a leader in the AI chip field, has become a star among tech stocks, with its stock splits drawing significant attention from investors. On June 10, 2024, NVIDIA completed its latest 10:1 stock split, reducing the stock price from the thousand-dollar range to the hundred-dollar range, sparking widespread market discussion. This article will provide a detailed analysis of NVIDIA’s recent stock split details, historical records, its impact on investors, and operational recommendations to help you fully understand the stock split event.

What Does NVIDIA’s Stock Split Mean?

A stock split is a common operation for companies to adjust their stock, and NVIDIA’s stock split is no exception.

In simple terms, a stock split involves dividing each share of stock into more portions, increasing the number of outstanding shares while reducing the price per share, with the company’s total market value remaining unchanged.

For example, in a 10:1 stock split, one share becomes ten shares, with the stock price divided by ten, but the total value remains the same. This operation does not require shareholders to take any action; brokers will automatically adjust the stock records in their accounts.

The purpose of a stock split is to make the stock price more accessible, increase liquidity, and attract more investors. NVIDIA implements the stock split by amending its articles of incorporation, with a transparent and open process. For beginners, a stock split is like cutting a large cake into smaller pieces; although there are more pieces, the overall size remains unchanged.

Has NVIDIA Split Its Stock Before? What Was the Situation?

Since its initial public offering in 1999, NVIDIA has split its stock six times, with its stock split history reflecting the continuous rise in its stock price alongside business growth.

Here are the details of NVIDIA’s six stock splits:

• June 27, 2000: Split ratio 2:1. At that time, the graphics card market was expanding, and NVIDIA was in its early development stage. The stock split aimed to better adapt to the company’s growing market value and expand the shareholder base by lowering the price per share, making it more accessible to a broader range of investors.

• September 12, 2001: Split ratio 2:1.

• April 7, 2006: Split ratio 2:1.

• September 11, 2007: Split ratio 3:2. This was an important split in the company’s history, with the stock price rising due to technological advancements, enhancing the attractiveness of NVIDIA’s stock and propelling the company’s development.

• July 20, 2021: Split ratio 4:1. The stock price was around $600 before the split. At that time, AI demand was beginning to surge. After NVIDIA announced the stock split, the stock was warmly welcomed by the market, with investors highly optimistic about the company’s future development. On the day the split announcement was made, NVIDIA’s stock price increased by 2.6%, and from the announcement to the completion of the split, the stock price soared, with a maximum increase of over 40%.

• June 10, 2024: Split ratio 10:1. This was NVIDIA’s largest-scale stock split to date. With the company’s market value exceeding $3 trillion and a high per-share price, the stock split aimed to increase liquidity and facilitate retail investor participation. Additionally, the company increased its dividend by 150% to $0.01 per share after the split.

These stock splits mostly occurred when the stock price was high, aiming to enhance liquidity. The specific records can be found on NVIDIA’s official website or in SEC filings.

When Was NVIDIA’s Last Stock Split? What Was the Ratio?

NVIDIA’s most recent stock split took place on June 10, 2024, with a split ratio of 10:1.

The specific arrangements for that split were as follows: Shareholders as of the close of trading on June 6, 2024, received an additional nine shares for each share they held. The new shares were distributed after the close of trading on June 7, 2024, and trading began at the post-split price on June 10, 2024.

For example, if the stock price was $1,200 before the split, it would be approximately $120 per share after the split. This stock split was announced by NVIDIA on May 22, 2024, when the company released its first-quarter financial report. At that time, the company reported revenue of $26 billion, a year-over-year increase of 262%, and a profit increase of 628% year-over-year, with outstanding performance driving the decision to split the stock.

Why Did NVIDIA Decide to Split Its Stock?

There were several clear motivations behind NVIDIA’s decision to split its stock.

First and foremost, lowering the stock price was the main reason. Before the 2024 split, the stock price exceeded $1,000, which was a high barrier for retail investors and employees. After the split, the $120 price per share made it more affordable for more people to purchase whole shares.

The stock split also increased liquidity. With the number of outstanding shares increasing tenfold, trading volume rose. For example, after the 2024 split, the average daily trading volume significantly increased, enhancing market participation.

Beyond the numerical changes, a stock split is often seen as a signal of company confidence. Along with the 2024 split, NVIDIA announced an increase in its dividend from $0.04 per share to $0.10 per share (or $0.01 per share after the split), a 150% increase. These actions suggest that management is optimistic about the future, aiming to expand the investor base and optimize the stock structure.

What Happens to My NVIDIA Stock After the Split?

If you hold NVIDIA stock, the main thing to look at after a stock split is the split ratio.

Taking the 10:1 split in 2024 as an example, if you had one share worth $1,200 before the split, you would own ten shares worth $120 each after the split, with the total value remaining at $1,200. The number of shares you hold increases proportionally, the stock price decreases proportionally, but your total assets remain unchanged.

This adjustment is automatically completed by your broker, with your account directly showing the new number of shares and price, requiring no action from you. If you participate in a dividend reinvestment plan, the dividend per share will also be adjusted after the split. For example, in 2024, it was $0.01 per share after the split, with the total dividend amount remaining the same.

For retail investors, after the stock split, you hold more shares, which increases trading flexibility, but your actual wealth remains unchanged. You just need to pay attention to the account updates.

What Impact Does NVIDIA’s Stock Split Have on Other Tech Stocks?

NVIDIA’s stock split may have a domino effect on the tech sector, especially for companies with high stock prices. After the 2024 split, the market speculated that companies like Microsoft (around $450 per share) and Meta (around $500 per share) might follow suit, as stock splits can enhance liquidity and retail investor participation. This trend was also seen after Amazon’s (20:1) and Google’s (20:1) stock splits in 2022.

As a leader in AI, NVIDIA’s stock split may increase overall attention on tech stocks and boost sector activity. However, the specific impact depends on each company’s strategy and market environment, and whether other companies will split their stocks remains to be seen based on their policies.

Conclusion

Historically, NVIDIA’s multiple stock splits have almost always been accompanied by significant business breakthroughs, and this round of stock split is another value release driven by the AI wave. For investors, understanding the logic behind the stock split and grasping its impact on stock structure and investment timing is an important part of assessing the value of tech giants.

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