Nvidia Share Split Pushed Its Share Price Up. Who’s Next?
$NVIDIA(NVDA.US$ reported its first quarter earnings last Wednesday. Sales jumped 262% in the first fiscal quarter to $26 billion. It’s an 18% gain from the previous quarter. In terms of profit, it jumped 461% from a year ago. As you can imagine, that set of earnings shot up its share price over 20% in the past 5 days alone. The excitement doesn’t stop there.
Together with the earnings announcement, Nvidia also said that it is splitting its stock 10 for one, effective at the close on 7 June. That means for every 1 Nvidia share that you own today, it’s going to become 10 shares on the 8th June. The share price will be adjusted as well by dividing the share price by 10 based on the closing price a day before. Ultimately, current shareholders will own more shares, but the same dollar amount of stock.
The point of a split is to reduce the share price to make a stock more affordable, given that higher share prices can dissuade some retail investors from buying. If a lower price does trigger buying, the company’s market valuation would rise, which is exactly what the market is expecting and pushing the share price up recently.
With the US market keep going up, many stocks are currently trading above $1,000 per share. Some of these stocks include Chipotle Mexican Grill, AutoZone, Mettler Toledo International, Broadcom, Fair Isaac, and TransDigm Group. In fact, Chipotle announced a 50-for-1 stock split in March, which the board of directors approved. Next, the shareholders of Chipotle would have to vote to approve the split to happen.
Other possible split candidates could be Domino’s Pizza, UnitedHealth Group, Parker-Hannifin, Thermo Fisher Scientific, Netflix, and Eli Lilly, all of which have stock prices above $500. Perhaps, the market would be speculating for a share split exercise of these stocks and trade on them to make a quick profit. Disclaimer tho, this is not investment advice, DYOR.
Together with the earnings announcement, Nvidia also said that it is splitting its stock 10 for one, effective at the close on 7 June. That means for every 1 Nvidia share that you own today, it’s going to become 10 shares on the 8th June. The share price will be adjusted as well by dividing the share price by 10 based on the closing price a day before. Ultimately, current shareholders will own more shares, but the same dollar amount of stock.
The point of a split is to reduce the share price to make a stock more affordable, given that higher share prices can dissuade some retail investors from buying. If a lower price does trigger buying, the company’s market valuation would rise, which is exactly what the market is expecting and pushing the share price up recently.
With the US market keep going up, many stocks are currently trading above $1,000 per share. Some of these stocks include Chipotle Mexican Grill, AutoZone, Mettler Toledo International, Broadcom, Fair Isaac, and TransDigm Group. In fact, Chipotle announced a 50-for-1 stock split in March, which the board of directors approved. Next, the shareholders of Chipotle would have to vote to approve the split to happen.
Other possible split candidates could be Domino’s Pizza, UnitedHealth Group, Parker-Hannifin, Thermo Fisher Scientific, Netflix, and Eli Lilly, all of which have stock prices above $500. Perhaps, the market would be speculating for a share split exercise of these stocks and trade on them to make a quick profit. Disclaimer tho, this is not investment advice, DYOR.
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