2024-06-09 18:55:02
Nvidia announced a stock split last month, making each share of the company more affordable for investors. A stock split results in an increase in the number of shares of the company without any change in the shareholder equity and diluting current shareholders’ ownership interests.
For example, if you buy 100 shares of a firm that trades at $100 per share and the company announces a two-for-one stock split, you will own 200 shares at $50 per share instantly. If the company pays a dividend, your dividends per share will decrease proportionally.
NVIDIA trading at around $1200 is going for a ten-for-one stock split. For each record holder of common stock as of the close of market on Thursday, June 6, 2024, will receive nine additional shares of common stock, to be distributed after the close of market on Friday, June 7, 2024.
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Trading is expected to commence on a split-adjusted basis at market open on Monday, June 10, 2024. If Nvidia shares were trading at $1,200 before the split, an investor holding one share before the split would hold 10 shares priced at $120 each after the split. So, do not get confused if the Nvidia stock price falls to $120 on June 10.
Earlier, Nvidia surpassed Apple to become the second most valuable company in the world. But after the June 6 closing, Apple was back in No. 2 spot. With a market capitalization of $2.97 trillion, Nvidia dropped to 3rdd spot behind the market cap of Apple, which now has a $2.98 trillion valuation. Microsoft tops the list with a $3.15 trillion market cap. Going by the impressive performance, Nvidia could be setting up to topple Microsoft as the most valuable company in the world.
Further, NVIDIA is increasing its quarterly cash dividend by 150% from $0.04 per share to $0.10 per share of common stock. The increased dividend is equivalent to $0.01 per share on a post-split basis and will be paid on Friday, June 28, 2024, to all shareholders of record on Tuesday, June 11, 2024.
NVIDIA share price is up by 200% over the last 12 months while in 2024 YTD, the stock has rallied by 135%. With a market capitalization of $2.86 trillion, Nvidia is closing in on Apple, which is ahead with a $2.98 trillion valuation. Microsoft tops the list with an impressive $3.09 trillion market cap, while Meta, at the bottom of the trillion dollar market cap list, is valued at $1.20 trillion.
Stock splits have got more to do with investing behaviour. “Much of the recent rise in price is considered the positive mojo of NVDA’s upcoming stock split. Even though stock splits are essentially meaningless to institutional investors — and I will assert of similar ‘benefit’ to individuals in an era when fractional shares and listed options are readily available to small investors – the psychological effect has value.
The other factor to reckon with is whether the continued rush into NVDA and other semiconductor stocks is resulting from new money coming into the market or whether existing cash is simply being reallocated,” says Interactive Brokers Chief Strategist Steve Sosnick.
The huge rise in the interest in Nvidia stock making it the most-talked-about share in Wall Street is the company’s new Blackwell chip. Jensen Huang, CEO of Nvidia had said that the company’s new Blackwell chips would generate “a lot” of revenue this year as demand for the computational power used in generative AI grew. Nvidia unveiled the Blackwell chips in March, claiming that they are twice as powerful as the current generation of chips for training AI models.
Record sales of artificial intelligence processors drove Nvidia’s revenue up 262% in the previous quarter, exceeding expectations, and its CEO claimed the company’s explosive growth will continue this year with the introduction of a new chip line.
