June 9, 2024
Nvidia 10-for-1 Stock Split. A 50-for-1 Stock Split coming soon?!
Nvidia, a leading player in the semiconductor industry, has announced a 10-for-1 stock split effective June 7, 2024. This means that for every share of Nvidia stock you currently own, you’ll receive nine additional shares. While the total value of your holdings won’t change, the price per share will be divided by ten.
Source: Google
What This Means for Investors after the stock split
- Accessibility: The lower share price post-split makes Nvidia stock more accessible to smaller investors.
- Liquidity: Increased number of shares can enhance trading liquidity, making it easier to buy and sell shares.
- Psychological Impact: Splits can create a perception of increased affordability, potentially driving more investment interest.
However, it’s essential to note that a stock split doesn’t change the intrinsic value of the company. Long-term growth prospects, competitive positioning, and financial health remain key considerations.
A 50-for-1 Stock Split coming soon on 25 June?!
The stock-splitting wave is coming?!
Following suit, a company has intentions to do a 50-for-1 stock split! This next round is a massive one which is increasing the number of shares of this company by 50x!
Similarly, Chipotle (NYSE: CMG) is set to execute an unprecedented 50-for-1 stock split on 25 June 2024. The last time such a stock split occurred was in 2010 when Warren Buffett’s Berkshire Hathaway did a 50-for-1 split for its BRK.B shares, to make shares more affordable for investors. For every share owned, investors will receive an additional 49 shares, drastically lowering the individual share price.
Source: Google
With a share price of over $3,000, retail investors with a low amount of capital might need to mess up their portfolio weightage before buying 1 share.
The Rationale Behind Chipotle’s Stock Split
Similar to Nvidia, Chipotle’s stock price has soared, reflecting robust performance and growth expectations. The company aims to make its shares more affordable, attract a broader investor base, and increase market liquidity.
Does Stock Split Matters Much?
While stock splits can make shares more affordable and potentially increase liquidity, they don’t inherently affect the company’s value or fundamentals. Investors should focus on:
- Company Performance: Nvidia and Chipotle have demonstrated strong growth and profitability.
- Market Trends: Both companies operate in industries with robust long-term growth prospects.
- Financial Health: Evaluate the financial stability and future growth potential.
According to the Chief Equity Strategist, Jim Lebenthal, IT DOES!
Check it out:
Source: CNBC
Of course, the potential is mainly short-term.
Final Thoughts on Stock Split
In our latest Wealth Pulse, I’ve shared my views along with other interesting finds as well as how dark the corporate world can be to investors.
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In the case of stock splitting, it really shouldn’t be the deciding factor whether you buy or sell shares of certain companies.
Share price, in this age, shouldn’t be a concern to investors with small portfolios. Why? Fractional shares.
Just like your Cryptocurrencies, assets can be bought in decimals!
With many brokerages offering fractional shares trading, you can buy 0.1 Shares of Nvidia which effectively has the same price point after the split.
The split is more beneficial to the listed company as the increased shares means they can consider issuing out to their employees. This is the case for Chipotle, which mentioned they would offer a one-time equity grant to all restaurant managers and crew who had been with the chain for more than 20 years.
If you ask me, why only 20 years of loyal employees are rewarded 🤔 Is 10 years not long enough?
Anyways…
Stock splits by Nvidia and Chipotle offer exciting opportunities for investors but should be viewed within the broader context of each company’s performance and market dynamics. Stay informed, and consider these splits part of your overall investment strategy.
For more insights into stock splits and other market trends, check out our blog and stay updated with the latest news and analysis.
