IMPORTANT POINTS:
- Nvidia will face a new 10-for-1 stock split this Friday. What could happen to the titles, according to historical data?
- The split comes due to the significant rise the company’s stock has seen recently. What’s more, in the last three years, it has accumulated an increase of more than 580%.
- History highlights that Nvidia has fallen after previous divisions, but there are several asterisks to take into account.
When the market closing bell rings this Friday, Nvidia will complete a new stock split, this time from 10 for 1.
This means that shareholders will receive nine additional shares for each one they own. He change will take place on Monday, June 10 and it should be noted that the division No will modify the value of the company.
Why it happens? The chip company’s shares have increased exponentially. In 2023, they climbed 205%, while In the last three years they accumulate a profit of 580%.
What usually happens after each Nvidia split?
Since its initial public offering in 1999, the company has done five stock splits and the results were not as expected.
On average, stocks fell 23% in the 12 months following each split. Although it is important to clarify that some of the falls had to do with the macroeconomic context of those years.
For example, four of the last five stock splits occurred very close to a recession. Logically, during those periods not only Nvidia fell, but the entire general market.
The current moment is different for Nvidia
The news of the chip firm is almost unbeatable. It exceeded 3 billion market capitalization, it is a leader and pioneer in the creation of chips in the artificial intelligence segment and its shares do not stop increasing.
In parallel, it is one of the favorite companies by Wall Street investors for one key reason: Their titles are not overrated On the contrary, its price-earnings ratio is falling.
Furthermore, analysts are super optimistic about the future price of shares. Nvidiawhile the company expects to grow earnings per share at a rate of 38% annually over the next three to five years.
