NVIDIA Stock Split: Is there a Split on the Cards?

NVIDIA Stock Split: Is there a Split on the Cards?
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NVIDIA Stock Split

– Amazon and Alphabet have announced stock splits while Tesla is seeking shareholders’ permission to split its stock
– NVIDIA has declared 5 stock splits so far but shareholders did not benefit from most of the splits immediately. However, the last split in 2021 led to a surge in the share price of NVIDIA
– $150 to $300 price range is seen as comfortable for investors. NVDA is trading between $200 and $300 at the moment. Stock splits made below the price of $100 in case of NVDA were not sustainable
– Stock split on the back of strong quarterly results was very good for shareholders
– NVDA is likely to announce stock split only if quarterly results exceed expectations and the stock price is much above $300

NVIDIA Stock Split: Nvidia Stock Split History

Nvidia Corporation has a history of stock splits. Nvidia Corporation has announced stock splits on five different occasions in its trading history on Nasdaq. The stock split history is listed below for reference: –

RATIO
06/27/2000
2:1
09/17/2001
2:1
04/07/2006
2:1
09/11/2007
3:2
07/20/2021
4:1

NVIDIA Stock Split: Inference from past Splits

  • Stock split is considered a good sign for the company. It has been observed that stocks get a short-term push just after the stock split. But that is not the case with Nvidia. At the time of the first split, the stock was trading around $185, and post-split it began trading at around $85 and it remained at the same level till the next split i.e. 17.9.2001. The stock did not reach this level again for the next 10 years.
  • After a series of four stock splits in seven years between 2000-2007, NVIDIA announced the next stock split only in 2021. But Nvidia was not alone, Google, Apple, Amazon, Microsoft, and other big companies stayed silent for nearly two decades from 2000-2020. For example, Before the recently announced stock split, Amazon Inc last declared a stock split in 1999. Microsoft last announced a split in 2003. Similarly, Ford Motors last announced a split in 1994.
  • On 7th April 2017, Nvidia closed at $25 considering all the splits. As of this writing (4.04.2022) Nvidia closed at $273.60. That is almost 1000% return in last five years. The handsome return in stock is due to increased demand of major products like GPUs of Nvidia in gaming and Omniverse.

If You Invested $10,000 in Nvidia in 1999, This Is How Much You Would Have Today

NVIDIA Stock Split: Last Stock Split in July 2021

  • Nvidia announced a 4:1 stock split on May 26th, 2021 along with its first-quarter results. The stock price was trading around $800 and then it came back to around $200. The primary reason to announce the stock split was to make it more accessible to small retail investors. Although various brokers do allow for fractional share purchase, a retail investor is more comfortable in buying complete shares. Also a price range between $150 to $300 is seen as comfortable (Looking at NVDA, Amazon, Alphabet Stock Splits).
  • NVDA share price closed at $186.12 on 20.7.2021, and the in last the one-year stock has given 93% return. Share price touched an all-time high of $333.76 on 19th November 2021. So in less than a four-month period, the share price almost doubled, but the rally could not be sustained due to uncertainties in the global market and various other factors like inflation fears in US and Russia Ukraine war.
  • The split in 2021 was different from other splits as this was on the backdrop of very strong quarter results. First-quarter revenue in 2021 was $5.66 billion, greater than the $5.3 billion expected and it rose 84% YoY. Earnings per share also surged 106% Gaming segment revenue increased 106% while data center revenue surged 79% YoY. So the company had shown very strong performance in the last quarter and even in the year prior to announcing the split in 2021 and that is the main reason why the stock shot up more than 180% in less than four months post announcing split.
  • Share price at the time of all splits barring most recent one was in the range $50-100 and post-split it hovered around $30-50. The same was not the case in 2021, thanks to an extraordinary run-up of the stock and share price was around $780. It clearly signals that split in 2021 was meant to make it more accessible to investors while all the previous ones were carried out with some other intention, maybe to dilute the shares outstanding.

NVIDIA Stock Split: When will there be a stock split next?

In theory, it is difficult to predict the next stock split. However, looking at past data, there are some scenarios under which a stock split by NVDA makes sense

  • Stock Price > $300
  • Solid Quarterly Results

The next quarterly results are due in May. So what we can say is NVDA will probably announce a split only after the quarterly results and if the results beat expectations and the stock price is much above $300.

But investors should not wait for another stock split announcement to enter NVIDIA in their portfolio. As the world struggles with chip shortages, it will not be bad idea to invest in Nvidia given that Nvidia has outperformed Intel (INTC) and Advance Micro devices (AMD) in last one year with Intel giving negative return of 27% and AMD giving 32% positive return in comparison to 90% return from Nvidia (NVDA).  

Also Read: NVIDIA Stock Forecast

Also Read: NVIDIA stock Forecast 2022

Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

NVIDIA Stock Split: Is there a Split on the Cards?

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