Nvidia stock is splitting this week: Here’s what that means for NVDA investors

The hottest tech stock of the past two years has no doubt been Nvidia Corp, the maker of chips that power the high-end servers that run AI platforms like OpenAI’s ChatGPT. At the end of May 2022, NVDA shares were trading at around $190 per share. But as of the time of writing this morning, shares are trading at over $1,125.



Last month, Nvidia announced that it will split its shares later this week. Here’s what you need to know about Nvidia’s upcoming stock split.



What is a stock split?



A stock split is when a company decides to create more shares in itself by splitting its number of current shares. Stock splits can be done in any increment that the company’s board and investors approve of, such as a 2-for-1 stock split, which would see the number of shares double after the split, or a 20-for-1 split, which would see the number of shares in a company increase by 20 times.



For example, if a company had 100 shares of its stock available before announcing a 20-for-1 stock split, after the split is enacted there would now be 2,000 shares of stock in the company.



How much is Nvidia spitting the stock by?



On May 22, Nvidia announced it would split its stock by 10-to-1. So after the split, there will be 10 times more shares of NVDA available than there are today.



When do Nvidia’s shares split?



Nvidia says the stock split will happen at the close of the market on Friday, June 7, 2024. Provided you were a shareholder of record who owned common stock as of the close of the market on Thursday, June 6, you’ll then receive an additional nine shares of NVDA for every share you previously held. So if you held 10 NVDA shares before the split, you’ll now hold 100 NVDA shares after the split.



Shares will begin trading at their new split-adjusted price on Monday, June 10, 2024.



What does this mean for investors and Nvidia’s share price?



Actually, it doesn’t mean too much at all. That’s because neither shareholders nor Nvidia will make any money off the stock split. Though shareholders of record will suddenly have 10 times the NVDA shares that they had presplit, those shares will all be worth 10 times less.



So when the total price of the post-split shares is added up, it will equal the same value the total presplit shares did.



Likewise, since a company’s market cap is determined by adding up the total value of all of its shares, Nvidia as a company won’t actually be worth more after the split even though there will be 10 times the number of shares in the company.



So why is Nvidia splitting its stock then?



Mainly to make the shares look more attractive to retail investors and employees. Today’s premarket share price is around $1,125. That makes it hard for mom-and-pop investors who may only have $500 to invest to buy shares in Nvidia. 



But suppose NVDA stock closes on Friday at around the current price of $1,125. In that case, that means its post-split price will be around $125 per share on Monday, making the stock much more accessible, which may ultimately help the stock price go further in the future if more people can afford to buy in.



Nvidia specifically said the stock split’s aim is “to make stock ownership more accessible to employees and investors.”