NVIDIA is executing a stock split!

$NVIDIA (NVDA.US)$ A stock split involves increasing the number of outstanding shares in proportion to the current shares, while reducing the per-share value accordingly. This strategy is often used by companies to attract investors and enhance liquidity. Theoretically, the split doesn't change a company's actual value as the decrease in share price is offset by an increase in the total number of shares outstanding.

After a split, shareholders' ownership percentages remain unchanged. For instance, in a 2-for-1 split, each share becomes two, but the ownership percentage stays the same. Companies adjust for this split through a "record date" adjustment, ensuring shareholders' total value remains consistent.

The split only alters the share price and number of shares, not the company's assets, net worth, or intrinsic value. The balance sheet remains unaffected.

NVIDIA has split its stock several times in the past, including 2-for-1 splits in 2000, 2001, and 2006, and a 3-for-2 split in 2007.

However, historical data suggests stock splits aren't always a catalyst for price appreciation. Analysis of 240 recent US stock splits showed an average two-week gain of only 0.44%, with less than half outperforming the $S&P 500 Index (.SPX.US)$ . Over six months, these stocks averaged a 6.6% return, slightly above the S&P 500's 5.4%.

Large-cap stocks with pre-split prices over 400andmarketcapsexceeding100 billion tend to fare worse, averaging a six-month loss of 2.66% post-split, with only 37.5% outperforming the S&P 500's 3.8% gain. This may be due to their high valuations before the split, limiting further upside.

NVIDIA's history, however, is more positive. After its 2021 split, the stock gained nearly 40% in six months and has risen over 500% since the last split.