By Dhirendra Tripathi
Investing.com – Nvidia (NASDAQ:NVDA) shares were up more than 2% Friday after announcing a 4:1 stock split.
The stock is up around 70% from a year ago, and hit a record in April with profit and sales accelerating during the pandemic, which drove demand higher. The chip industry is now seeing a shortage with continued strong demand for everything from cars to phones that require them to work.
Each Nividia shareholder will receive a dividend of three additional shares of common stock for every share held at close of business on July 19. The exercise will increase the number of authorized shares of common stock to 4 billion.
Trading is expected to begin on a stock split-adjusted basis on July 20.
Nvidia has called for a shareholder meeting on June 3 to approve the stock split.
It is intended to make ownership of the company’s equity more accessible to investors and employees as the price of the stock goes down to the extent of the ratio of the split.
A stock split creates a feel-good factor as buyers find them more affordable even as the company’s financials and the related ratios remain unaffected.