NVIDIA Stock Split Rumors and History

NVIDIA Stock Split 

NVIDIA Stock Split 

NVIDIA Stock Split underwent a 4-for-1 forward stock split on 7/20/2021? In case you’re wondering, a forward stock split is when the total number of shares held by shareholders (known as outstanding shares) increases while the price per share typically decreases. This type of stock split can be affected by shareholders at any time.

One thing to remember about a forward stock split is that it does not by itself affect the total dollar value of your position unless you’re holding some partial share as well as fluid fractional shares but no matter what, I’m sure you already knew that. Although the monetary gain isn’t guaranteed and one’s position could slightly dwindle in value over time, one way or another, the exciting part is knowing that things might get better if one chose to stay invested.

To figure out how many shares you would have after an NVIDIA stock split, you first need to find the ratio of the split – this means dividing the number of new shares that will be created by the original amount. For example, if there are two 2-for-1 splits, also known as forwarding splits, where one share becomes two shares post-split, then the ratio is 2/1. Next, multiply your original number of shares by this ratio (four-for-one multiplies four times one and results in four).

To give an example to better clarify this concept, let’s say you own 40 shares before a 4-for-1 stock split. The calculated equation you’d use is 40 x 4 = 160. This shows that after the split, you now own 160 shares instead of just 40 – since 1 divided by 4 equals 0.25 and all fractions get rounded up in this case.

Owning 1 share of Example Company was like owning 1/720th of the company. After it completed the 4-for-1 forward split, your ownership increased to 4 shares, which would have been like owning 1/480th of the company (because 480 is 7*70). In other words, when a company splits its stock, shareholders don’t end up with more money or more shares. Instead, they just own multiple shares. Their total dollar value remains unchanged.

Where will I receive a new shares?

If your shares are held in book-entry form in your name on the books and records of Computershare, the additional shares that you are entitled to receive in connection with the stock dividend will appear in your cash app business account within 48 hrs. On July 19, 2021, you will be mailed a certificate that shows your updated holding. If you hold a stock certificate in your name, after the distribution date (July 19, 2021), you can either redeem it online or by phone with Computershare investor service at +1-866-337-6320.

Due to the Division of Stocks, do I have tax consequences?

NVIDIA Stock Split cannot provide tax advice. Successfully operating and managing your own business is a challenging experience, but it’s also incredibly rewarding. For U.S. taxpayers, a stock split in the form of a stock dividend is generally not taxed by the IRS but may be taxable in your state. If you pay taxes in a country other than the U.S., the total value of your shares won’t change due to the split, but you’re encouraged to confirm with your tax advisor regarding any tax implications.

How To Trade It

Maximum gain on the trade is $93.50 per spread. Maximum risk is $63.50 per spread. Return on risk is 24%. The short $85 strike provides a 15% downside cushion to the $53.27 closing price of NVDA stock. It is also well below the support area at $85. The spread expires before earnings, which currently estimated for late August. This eliminates any earnings related risk.

 Inference from past Splits

NVIDIA Stock split announcements send prices soaring, but in the case of Nvidia, it did not. Even though their first declaration of a stock split saw their stock price drop to $85 from $185, they remained at this same level until after their next declaration.

The company had trouble going above the 2000 mark for another decade – having only declared four splits in seven years up until 2007. This was after several other companies stayed silent on the matter for two decades straight between 1999 and 2020. For example, Amazon, Microsoft or even Ford Motor Co. all last declared a stock split over twenty years ago – some as early as 1994.

NVDA 5 Year performance and comparison with AMD, Intel and Qualcomm

Screenshot 2022 06 04 at 3.01.49 PM

NVIDIA  Last Stock Split in July 2021

Nvidia has joined the likes of Amazon, Alphabet, and Apple by announcing a 4:1 stock split for shareholders. The split will be effective on May 26th and will spread share prices across a much more accessible price range of $150 to $300 ($800 average) as opposed to the previously announced $300 to $350 range because it allows retail investors— such as investment banks — to purchase some shares too.

In 2021, Nvidia announced a $1 billion stock split. On the surface, the number of shares outstanding doubled, with no further dilution and the share price was unchanged in inflation-adjusted terms. The split was not particularly notable on its own. But a closer look at what was happening under the surface reveals just how successful Nvidia had become.

 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

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