If you hold Nvidia (NASDAQ:NVDA) stock today, get ready for your position to change. Anyone with a position in the artificial intelligence (AI) leader will be a part of the 10-for-1 Nvidia stock split, which begins today. Shares of NVDA stock are down today as the market prepares for this significant change. But that’s to be expected when a major company undergoes a stock split.
Even if shares finish out this week in the red, investors should expect Nvidia to rebound next week as the market adjusts to NVDA stock trading on a split-adjusted basis. While investors who currently hold shares can benefit from the stock split, trading at a post-split price won’t actually commence until June 10.
The NVDA Stock Split: What to Expect
When a company splits its stock, it does so to make shares accessible to new investors. That’s exactly what’s happening here. With Nvidia touching $1,200 per share this week and exceeding a $3 trillion market capitalization, it’s safe to say that this event comes at a good time. Even after the stock split, NVDA will still trade at a high price level. As InvestorPlace contributor Josh Enomoto reports:
“Buying NVDA stock can be onerous for investors who lack access to brokerages offering fractional equity ownership. Pre-split, the security is trading hands around $1,200, which may not be accessible to many retail investors. Essentially, NVDA’s success has become its own challenge. However, with a 10-for-1 split, the per-unit offering will be lowered, enabling greater access.”
Many retail investors will likely scramble to start buying up shares as soon as the Nvidia stock split takes effect on Monday. If that happens, shares will surge as the trendy frenzy pushes the newly split stock higher.
We’ve seen what can happen when investors pile into a stock at the same time. Most meme stocks that investors often pile into aren’t worth owning. But NVDA is one of the best performing stocks on the Nasdaq right now, with gains of more than 200% over the past year. With its share price lowered, most people will want to take advantage before NVDA stock starts surging again.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
