NVDA decision to a 10 to 1 split will help individual investors to access stocks that moved up 2.5 times in the past 12 months. The split will happen in June.
NVDA has acknowledged its retail-heavy shareholder base and sky-high $1,000 stock price with a 10-1 stock split. This means investors will receive nine additional shares for each one they already own at the close of the market on Thursday, June 6, 2024. The shares are to be distributed after the close of the market on Friday, June 7, 2024, with trading expected to commence on a split-adjusted basis at market open on Monday, June 10, 2024.
The chips giant is a popular choice among retail investors, being the fourth most widely held on the eToro platform with the number of NVIDIA holders surging 40% in the past quarter.
NVIDIA had the 9th highest share price of all the S&P 500 constituents, well below the $7,500 of builder NVR, but an increasing obstacle to retail investors being able to hold a diversified portfolio, with many but not all retail investors having access to fractional ownership programs. Also, according to the latest eToro Retail Investor Beat survey of 10,000 self-directed investors in 13 countries, 80% of retail investors have portfolios of under $120.000 with 64% having portfolios below $.60.000. That is why, an over $1000 stock would have been difficult to buy and balance in small portfolios. The split will allow investors with small portfolios to invest in Nvidia.
A side-effect of NVIDIA’s stock split will be to put it in the running to follow Amazon and Apple into the price-weighted Dow Jones Industrials index, potentially pushing out fellow chip stock Intel that currently has the lowest weighting and $31/share price. But these adjustments to the emblematic DJIA index are few and far between, and others such as Alphabet may be ahead of NVIDIA in the queue.
So far Nvidia stock price is up almost 115% this year and over 2.5 times in the past 12 months. Nvidia posted good results and guidance but the competition in the field is heating up. Now wanting to be left behind, the biggest Nvidia clients are becoming its biggest competitors as Meta, Microsoft, Google and Amazon are also investing heavily in developing their own GPUs. Intel and AMD both are having projects related to AI and surprisingly networking companies like Arista eyed the high margin business. But for the time being Nvidia has an undeniable advance as an estimated 90% of the data centers are using its architecture.