This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Nvidia (NASDAQ: NVDA) has had an incredible rise since the start of 2023, up around 500%. As a direct result of its huge stock price increase, the cost of one Nvidia share is nearing $1,000. This threshold may seem arbitrary, but it's actually an important milestone with a special place in the stock market's mass psychology. Therefore, management teams often consider splitting their stocks around this nice, round number. Furthermore, Nvidia's management team has a history of enacting stock splits. Is Nvidia preparing for another split?The conditions are right
Stock splits can have both real and artificial effects. On the artificial side, you're essentially cutting the same-sized pizza into smaller slices. Investors with access to brokerages that offer fractional shares can already cut Nvidia's stock into pieces as small as they want (usually down to one-thousandth of a share). However, not every investor (especially those outside the U.S.) has access to this capability. In that sense, Nvidia's potential stock split becomes a real factor since more investors can purchase the stock without fear of overweighting their portfolio to one company. If you only have $100 to invest this month, a stock changing hands at $1,000 per share feels out of reach (even if fractional shares are available in your favorite stock brokerage). But will Nvidia do it? The company's history of stock splits suggests that another one could be imminent. Nvidia has split its stock five times since it went on the market. The latest was in 2021, when it did a 4-for-1 split. The stock traded for around a pre-split price of $744 -- cheaper than it is today. Before that, Nvidia last split its stock in 2007, when it would have traded at a split-adjusted price of just over $50. Stock splits were far more common back then, so the instances before the 2021 split may be less useful for forecasting purposes in 2024. Now that the stock price is above 2021 pre-split levels again, I'd say Nvidia is highly likely to enact a stock split.When will Nvidia announce another stock split?
After Nvidia announced its stock split on May 21, 2021, the stock had a strong run-up until the split took effect on July 20, increasing nearly 40% at its peak.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.