Nvidia’s 10-for-1 stock split takes effect after markets close today (June 7), giving shareholders nine additional shares for each one they own.
Nvidia’s stock will begin trading on a split-adjusted basis when the stock market reopens on Monday (June 10).
While the split doesn’t change the underlying fundamentals of Nvidia, it will make its stock more affordable to buy, taking the price of each share down to around $120 U.S. from just over $1,200 U.S. currently.
Investors who already own Nvidia’s stock will receive more shares at a lower price, which could prove beneficial over the long run.
The 10-for-1 stock split comes as Nvidia’s market capitalization tops $3 trillion U.S., making the microchip and semiconductor company the world’s second most valuable publicly traded company after Microsoft (MSFT).
Analysts say the stock split could lead to Nvidia being added to the Dow Jones Industrial Average (DJIA) in coming months, though no announcement has been made in that regard.
Some analysts are speculating that Nvidia could replace competing chipmaker Intel (INTC) in the Dow 30 index.
Intel’s stock has declined 36% so far in 2024 while Nvidia’s stock has risen 151% year to date.
Nvidia’s stock has rallied 30% higher since the stock split was announced on May 22 along with blockbuster first-quarter financial results.
Stocks tend to perform strongly after they split. Data from Bank of America (BAC) shows that average returns for companies are about 25% in the 12 months after a stock split is announced versus 12% gains for the benchmark S&P 500 index.
Nvidia isn’t the only company undertaking a stock split this year.
Later in June, Chipotle Mexican Grill (CMG) is splitting its stock on a 50-for-1 basis, undertaking one of the biggest splits in corporate history.
