Recent developments in the field of artificial intelligence (AI) have captured the public imagination over the past year or so. One of the byproducts of this trend has been the surging stock prices of companies at the forefront of this paradigm shift in technology. Nowhere is this more apparent than with chipmaker Nvidia (NASDAQ: NVDA), whose graphics processing units (GPUs) have become the gold standard for AI.
The company’s consistent execution and unrivaled business performance have fueled its meteoric ascent. Nvidia stock has gained 540% since early last year, driven by triple-digit revenue and profit growth resulting from surging demand for AI. Yet that’s just the beginning. Since Nvidia’s IPO in early 1999, the stock has soared from a split-adjusted price of $0.25 to more than $939, representing eye-popping gains of 375,500%.
On Wednesday, in conjunction with the release of the company’s quarterly results, Nvidia announced plans to split its stock for the first time since July 2020. The stock has gained more than 800% in the nearly four years since, which is likely the catalyst for the split. This revelation is sparking a fresh wave of interest in an already well-followed stock. Let’s review the mechanics of a stock split and what it means for investors.
Image source: Getty Images.
The stock-split details
Nvidia announced that its board of directors had approved a 10-for-1 forward stock split. This will result from an amendment to the company’s Restated Certificate of Incorporation, which Nvidia says “will result in a proportionate increase of the number of shares of authorized common stock.”
As a result of this split, shareholders of record as of June 6, 2024, will receive nine additional shares of stock for each share they own after the market close on Friday, June 7. The stock is expected to begin trading on a split-adjusted basis on June 10.
Nvidia investors won’t need to take any steps in order to receive the additional shares of stock. Brokerage firms and investment banks handle the particulars, with the adjustments being handled behind the scenes. The…
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