Nvidia looks primed for a stock split after $1 trillion rally
Nvidia Corp’s scorching rally has added more than $1 trillion in value this year alone, sending it well above the level where it last split its shares. Some see the AI giant well placed to do so again.
The company last announced a four-for-one stock split in May 2021, when it was trading at about $600 per share. Today, the stock is nearing the $1,000 level, extending last year’s 240% surge. While bulls argue that its valuation based on future earnings growth is relatively cheap, some potential investors may balk at the price.
“Probably in the next year or so, I expect the stock to split and that would be able to get some small retail investors into the stock where they think it’s out of reach right now,” said Ken Mahoney, president and chief executive officer of Mahoney Asset Management.
The reasoning Nvidia gave for 2021 split was “to make stock ownership more accessible to investors and employees,” according to a press release. It rallied to about $750 per share by July 19 that year — the day before it started trading on a split adjusted basis. After a 2022 drop, the shares have since blasted past those levels.
Stock splits are a cosmetic move generally enacted to attract smaller investors. The action reduces share price by redistributing the amount of equity over a larger number of stock, but doesn’t change anything about underlying fundamentals or valuation.
“I’m always of two minds,” said Mike Sansoterra, chief investment officer at Silvant Capital Management LLC, adding that on one hand, stock splits
