The price of Nvidia stock drops to $120! The NVDA is down 90% from Friday’s close, and here’s why.

After the stock split, the ownership rights of shareholders and shareholder equity are unaffected.

Last month, Nvidia announced a stock split that reduced the price per share for investors. (Reuters)

On Monday, when the US stock market opens, a significant decline in Nvidia’s stock price is anticipated! Before the market opens on June 10, Nvidia’s share price is trading at about $120. The closing price of NVDA’s Nasdaq-listed shares was $1200.89 on June 7. This indicates that since Friday’s close, Nvidia’s stock price has dropped by about 90%.

However, once Nvidia’s stock begins trading on Monday, investors and shareholders won’t need to worry. The truth is that on Monday, June 10, 2024, at market open, Nvidia’s shares will begin trading on a split-adjusted basis.

Last month, Nvidia announced a stock split that reduced the price per share for investors. A stock split dilutes the ownership interests of current shareholders and increases the number of shares of the company without affecting shareholder equity.

For instance, if a corporation announces a two-for-one stock split and you purchase 100 shares for $100 each, you will immediately possess 200 shares at $50 each. In the event that the business declares a dividend, your dividends per share will drop correspondingly.

When NVIDIA announced a ten-for-one stock split last week, its stock was trading for about $1200. Nine extra shares of common stock were awarded to each record holder of common stock as of Thursday, June 6, 2024, following the market close on Friday, June 7, 2024.

Trading is scheduled to begin on Monday, June 10, 2024, at market open, on a split-adjusted basis. An investor holding one share prior to the split would hold ten shares at a price of $120 each following the split if Nvidia shares were trading at $1,200 before the split. Therefore, if the price of Nvidia’s stock drops to $120 after the market starts on June 10, do not panic.

Additionally, NVIDIA is raising the quarterly cash dividend for common shares by 150%, from $0.04 to $0.10 per share. All shareholders of record on Tuesday, June 11, 2024 will receive the enhanced dividend, which is equal to $0.01 per share on a post-split basis, on Friday, June 28, 2024.

Over the past 12 months, NVIDIA’s share price has increased by 200%, and the stock has increased by 135% year to date in 2024. Apple has a valuation of $3.01 trillion, but Nvidia is gaining ground on it with a market capitalization of $2.97 trillion. With a staggering $3.15 trillion market capitalization, Microsoft is the market leader.

Stock splits are more closely related to investing habits. There will be ten times as many shares of Nvidia common stock after the split, which will lower the price of individual shares without changing the total quantity of Nvidia holdings held by investors or the market capitalization of the firm.