Nvidia’s Upcoming Stock Split: What Investors Need to Know
Nvidia, the renowned chip and graphics processor manufacturer, has announced a significant stock split. This move aims to make its shares more attractive to smaller investors. Here’s a detailed overview.
On Wednesday, May 22, 2024, Nvidia announced a 10-for-1 stock split. The chip manufacturer also revealed an increase in dividends from four to ten cents per share. The stock split is set to take place on June 7, 2024. Nvidia’s stock has surged over 110% since the beginning of the year, largely due to the ongoing boom in artificial intelligence. By implementing this stock split, Nvidia hopes to attract new small investors, as the shares will appear more affordable. Existing investors are also optimistic, anticipating higher demand and increased returns. Here, we answer the most important questions about the stock split.
What is a Stock Split?
A stock split increases the number of shares. If you own one Nvidia share on June 6, 2024, after the split, you will hold ten shares of the company. The value of these ten new shares will be equivalent to the original single share.
Essentially, a stock split means the price of a single share becomes more affordable through the issuance of new shares. For example, owning ten Nvidia shares on the record date will result in holding 100 shares post-split. However, the market capitalization, or the total value of all outstanding freely traded shares, remains unchanged.
When Was the Last Nvidia Stock Split?
Nvidia last announced a stock split on May 21, 2021, which was executed as a stock dividend. Unlike a traditional stock split, additional shares were issued and distributed to shareholders on July 19, 2021, after the U.S. market closed. This increased the number of Nvidia common shares from two billion to four billion.
Why Did Nvidia Conduct the Stock Split?
The purpose of the stock split was to make the shares more attractive to small investors. This was particularly relevant for Nvidia, whose stock value had more than tripled during the peak of the COVID-19 pandemic, driven by the surge in digitalization. Graphics cards, chips, and processors are key economic drivers, being integral to nearly all technological devices. The current AI boom has further propelled Nvidia’s stock prices.
This trend is reflected in Nvidia’s robust quarterly financial results.
Key Highlights from Nvidia’s Q1 Financial Results
Nvidia’s fiscal year ends on January 31, and the newly released Q1 results pertain to fiscal year 2025, though they are still within the calendar year 2024.
The Q1 results were released on May 22, 2024. Nvidia’s profit for Q1 2025 was $15 billion. The company achieved a revenue of $26 billion in the first quarter of 2025. The diluted earnings per share stood at $5.98.
Do Nvidia Shareholders Need to Take Any Action?
No. Shareholders who hold Nvidia shares by the end of trading on Thursday, June 6, 2024, will automatically receive nine additional shares for each share they own. The stock split will take effect after the U.S. market closes on Friday, June 7, 2024. Consequently, each Nvidia share will be priced at one-tenth of its previous value.
Are Stock Splits Common?
Yes, there are many examples. In August 2022, Tesla executed a 3-for-1 stock split to broaden its investor base. Amazon also conducted a 20-for-1 stock split in 2022, which led to a rise in its share price. Similarly, Eckert & Ziegler, a specialist in radiation and medical technology, performed a 3-for-1 stock split in August 2020. Other companies in the DAX index, such as SAP, Siemens, Beiersdorf, Henkel, BASF, Merck, Eon, and Fresenius, have also split their stocks, though this happened years ago.
Does a Stock Split Affect the Price Chart?
No. While a stock split theoretically causes a significant drop in the share price on the chart, as the value per share falls sharply, financial data providers adjust historical prices according to the split ratio, thereby smoothing the charts. This adjustment prevents any distortion in the visual representation of the stock’s historical performance.
