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10/06/24
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Nvidia Stock Split May Lead to Dow Inclusion
Nvidia’s 10-for-1 stock split meant to lure retail investors has been implemented and led to speculation over chances of the AI bellwether being included in the blue-chip Dow index.
The split, meant to lower value per share to make it more affordable for investors and employees, increased the company’s outstanding shares without affecting its market valuation.
On Monday, the stock dropped 0.2% after climbing close to 27% since the company announced the share split and last month’s strong forecast. The dominant AI chip maker also last week hit $3 trillion in market value and overtook Apple to become the world’s second-most valuable firm, with only Microsoft valued higher.
A market structure analyst at Triple D Trading, Dennis Dick, said with this type of split, there is often historically a hangover effect afterward and there will likely be some buyer exhaustion this week.
According to market analysts, stock splits normally attract individual investors who trade in smaller batches and have less capital to use than institutional investors.
Led by David Kostin, Goldman Sachs strategists said in a note although stock splits have recently not led to a significant increase in retail trading activity, there have been some exceptions like Nvidia’s 2021 split and Amazon’s split in 2022.
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