Nvidia’s stock split will occur on June 7th. Here’s what to expect:

The moment many investors have been waiting for has finally arrived. nvidia (NVDA 4.89%) plans to split its stock on June 7th. This is because the stock price has soared more than 3,000% in the past five years, recently exceeding $1,000.

This notable stock performance is thanks to Samsung Electronics’ overwhelming lead in the artificial intelligence (AI) chip market. The tech giant sells graphics processing units (GPUs) that power the most important AI tasks, such as training and inference, as well as a variety of other AI products and services. This has driven Nvidia’s profits to record levels quarter after quarter.

So why are investors so excited about the Nvidia stock split? This operation involves offering additional shares to current holders. This means lowering the price of each individual stock, making the price per share more affordable for more investors. Let’s take an in-depth look at the upcoming stock split and what we can expect from Nvidia afterward.

Image source: Getty Images.

Trade at a lower price

First, as mentioned, a stock split lowers the price of each stock. However, this kind of operation does not change the overall market value of the company or its holdings if you already own stock. Therefore, a stock split itself is not a reason to buy or sell a particular stock as it is simply a mechanical operation.

Stock splits are not known to help or hurt stock performance during the first few days of operations. However, this represents a good long-term move for companies in Nvidia’s situation. In other words, it’s a growth company with a strong outlook that has its stock soaring to incredibly high levels.

For example, a price level of $1,000 may make it difficult for some investors to purchase shares unless they have access to fractional shares, which some brokerages do not offer. So by splitting the stock, Nvidia makes it more accessible to a larger number of investors to buy the stock, both immediately and within months (or even years).

Now let’s talk about the surgery itself. Nvidia is doing a forward stock split, which is the most common kind of split. This includes giving more shares to current holders.

Nvidia’s 10:1 split means that if you own one Nvidia stock, you’ll receive an additional nine shares as part of the operation. You must be an Nvidia shareholder on the record date of June 6th to receive the additional shares. This means that if you buy or sell shares the next day, the rights to the new shares are transferred to the new owner. )

NVIDIA plans to distribute new shares on Friday, June 7th, the next trading day. And the stock is scheduled to begin trading at split-adjusted prices on June 10. Considering today’s stock price of $1,095, the stock price on June 10th should be around $109.

Investors don’t have to lift a finger.

If you’re an Nvidia shareholder, you won’t have to lift a finger before, during, or after the stock split – you’ll automatically have more shares once it’s done. If you want to buy Nvidia stock this week, you can proceed with your purchase as usual and you’ll also receive additional shares. Therefore, no special action is required for a stock split. At any point before or during this, you can buy or sell Nvidia as you normally would.

Nvidia stock will start trading at a lower price per share starting Monday, but don’t expect the stock to skyrocket because of this. As mentioned earlier, stock splits are not a catalyst for stock performance. That means Nvidia could continue to benefit in the coming weeks and months due to its earnings performance and demand for its chips and related products. The company is expected to launch its Blackwell architecture and related chips later this year, a potentially game-changing innovation, and anticipation of this could continue to drive the stock higher.

All of this means that yes, this is an interesting time for Nvidia and its shareholders, and even if the stock split itself doesn’t impact the stock’s performance, it’s still a smart long-term move. And in the near term, this week’s stock split will certainly keep investors’ eyes on Nvidia.