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The 10-to-1 stock split is a genius move by Jensen and a complete game changer.
After the split, grandparents will be able to buy 5 or 10 shares for their grandkids as a birthday present. People on monthly salaries will save up each month and buy a few shares. The possibilities are endless.
But more importantly, the split shows how much more growth potential the stock has. We are still very early in the AI revolution. Right now, it is only early adopters like META and Microsoft that buy the NVDA chips in great numbers. Once the model is proven, all the traditional industries like food, manufacturing, hospitality, etc,, will follow as they are late adopters.
Still early days, get in while you can.
TL;DR: If you’re a NVDA stockholder on June 7, 2024, you’ll receive additional shares due to its stock split. This does not change the value of your investment or your proportional ownership, only the number of shares you hold.
What happened?
NVIDIA announced a 10-for-1 forward stock split of NVIDIA’s issued common stock to make stock ownership more accessible to employees and investors. The stock split will occur on Friday, June 7, 2024, and the stock will start trading at its lower, post-split price on Monday, June 10.
What is a stock split?
A stock split divides each share into several shares. The most common type of stock split is a forward stock split. For example, a common stock split ratio is a forward 2-1 split (i.e., 2-for-1), where a stockholder would receive 2 shares for every 1 share owned.
This results in an increase in the total number of shares outstanding for the company, though there is no change in a shareholder's proportional ownership. Normally, a stock split will reduce the price per share of each share in proportion to the increase in shares.
Let’s look at what that means for an NVDA stock split. Let’s say you have 10 shares of NVDA in your account and the 10-for-1 split occurs when the stock is trading at $1,000. Here's how your investment would look after the split:
| Before | After | |
|---|---|---|
| Stock price | $1,000 | $100 |
| Shares | 10 | 100 |
| Value | $10,000 | $10,000 |
What does it mean for me as a shareholder?
You don’t need to do anything to receive your additional shares. For every share of NVDA you own by close of business on Thursday, June 6, you’ll receive an additional 9 shares as part of the stock split.
A stock split does not change the value of your investment or your proportional ownership, only the number of shares you hold. You’ll be able to see your new shares, cost basis, and gain/loss info in your account by Saturday, June 8.
What happens to my open orders?
When a security has a stock split, the only open Good 'Til Canceled (GTC) adjustments are:
Buy limit orders
Sell stop loss orders
Sell stop limit orders
Sell trailing stop loss orders
Sell trailing stop limit orders
GTC orders are adjusted before the market opens on Monday, June 10. If an existing order is adjusted, Fidelity sends a new confirmation to the client. Please note that open orders are reduced or canceled based on the Exchange's policies and procedures, not on a Fidelity policy.
What happens if I trade the stock after the split but before the stock begins trading at its lower price?
It’ll still be executed using the newly issued shares. You will see the term “due bills” referenced when trading during this time. A due bill adjusts transactions to reflect dividends, interest, stock splits, and other distributions that are reflected in the price of the security but have not yet been distributed.
The seller owes the buyer the amount of the dividend, interest, shares, or distribution when disbursed. This ensures that whoever owns the shares after the split will receive the additional shares.
What if I have fractional shares of a stock?
Customers holding fractional share-only positions also participate in stock splits. Different treatment may apply to any fractional share amounts that cannot be split.
What happens to options during a split?
Options contracts are adjusted during a stock split. The Options Clearing Corporation (OCC) adjusts an option position by changing the number of contracts, the deliverable, or the strike price.
This is best illustrated with an example: “1 NVDA Sep 1000” becomes ”10 NVDA Sep 100.”
| Details | Before | After |
|---|---|---|
| Stock Price | $1,000 | $100 |
| Contracts | 1 | 10 |
| Strike | $1,020 | $102 |
| Deliverables (shares) | 100 | 100 |
What are the tax implications?
A customer who acquires additional shares through a stock distribution or split reduces the per-share cost basis and defers taxation until the stock is sold.
What if I have other questions?
Check out our page on stock splits for more info. If you still have questions, drop them in the comments.