History Says an Nvidia Stock-Split Announcement Might Be Coming on May 22

History Says an Nvidia Stock-Split Announcement Might Be Coming on May 22

Nvidia (NASDAQ:NVDA) has become a stock near $1,000 again, which is typically a threshold at which investors start to expect a stock split. While there’s no hard and fast rule for when to expect a split (some companies never do), history tells us that Nvidia might consider a split now.

Plus, May 22 could be the day this one is announced, which is fast approaching. The last time Nvidia announced a stock split, the stock went wild and rose significantly. So, should you buy before this potential announcement?

The last stock split was announced on the same date in 2021.

The last time Nvidia carried out a stock split It was July 20, 2021. This four-for-one split split each Nvidia stock into four separate pieces, thereby quadrupling the number of shares and reducing the stock price to 25% of its original value . Without this distribution, Nvidia’s stock would be around $3,600 today.

However, the timing of this latest split announcement sets the stage for a potential announcement on May 22 when it releases first quarter fiscal 2025 results. In its first quarter fiscal 2022 results release ( which took place on May 26, 2021), Nvidia announced to shareholders that the board of directors had agreed to split the shares. This is perfect timing since the annual shareholder meeting was scheduled to take place a few weeks later so shareholders could approve the vote. At that time, Nvidia was trading at around $600, so the stock is much more expensive today than when it decided to split it.

While the scenario is almost identical three years later, I wouldn’t be surprised if Nvidia announced a stock split on May 22. The question is: will this trigger a surge like last time? After Nvidia’s first quarter results were announced, leading up to the stock split, the stock saw an impressive fall.

History Says an Nvidia Stock-Split Announcement Might Be Coming on May 22

NVDA Chart

With the stock up 30% in the days following the stock split announcement, who wouldn’t want to get ahead of this move? However, investors should not expect this kind of reaction again.

If Nvidia’s shares rose 30% from current levels, its market capitalization would increase from $2.3 trillion to around $3 trillion. This would allow Nvidia to surpass Apple as the second largest company in the world and the place near Microsoft as the largest company in the world.

I doubt a stock split announcement would create nearly $700 billion in value. Fortunately, there are other reasons to buy stocks.

Nvidia’s Growing Business Drives Stock Price Soaring

Although the threshold at which companies split their shares differs for each company, the reason remains the same: their stock price has become too high. This happens because the company is successful – a big deal.

Nvidia’s business has been on fire lately, with its graphics processing units (GPUs) selling at an incredible rate to satisfy demand for data centers built to fuel the artificial intelligence (AI) arms race.

Any stock movement resulting from a possible stock split announcement should be attributed to its GPU business, as that is the driving force behind the stock. With management guiding investors to about $24 billion in Q1 revenue (or 234% growth), we should see another monster quarter.

Although a stock split announcement is coming, investors should look beyond to determine whether Nvidia is a potential buy (or not).

Should you invest $1,000 in Nvidia right now?

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool Ranks and Recommends Nvidia. The Motley Fool has a disclosure policy.

Story Indicates Nvidia Stock Split Announcement Could Happen May 22 was originally published by The Motley Fool

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