Stock Split Watch: Is Nvidia Next?
A number of high-profile companies have initiated stock splits over the past couple of years. The real reasons for the splits vary depending on the company, but some market experts surmise that most splits are primarily driven by the belief that such a move will boost the demand for shares by making the resulting lower per-share price more accessible to a bigger pool of investors.
Most stock splits are nothing more than cosmetic moves. It simply reduces the stock price of a company in direct proportion to the increase in the number of outstanding shares. For example, if you own a stock that's priced at $150 and management decides to execute a 3-for-1 stock split, you'll now have three shares of $50 each.
The fundamentals of the companies executing the split generally don't change during such an event, though it is worth noting that stock splits tend to give the share prices a short-term bounce on account of increased demand driven by a more affordable price. This is exactly what Nvidia (NASDAQ: NVDA) investors experienced a couple of years ago after management announced a 4-for-1 stock split in May 2021.
Source Fool.com
