Nvidia announced a stock split on Wednesday that, on the surface, appears to mean nothing. But upon further inspection, it offers some important signals...
, the company announced plans to split its stock 10-for-1, meaning existing shareholders will receive 10 shares of Nvidia for every 1 they own at a price that is 10% of the market value.The number of Nvidia shares outstanding goes up and the per-share price goes down; there is no change in the value of the business.
In other words, companies are more likely to split their stock in good times than bad. Notable, given that Nvidia's stock split also came alongside a 150% increase in its dividend., Jensen Huang, that demand for its chips remains robust while profits and sales rose more than 400% and 200%, respectively, would suggest Nvidia remains in good standing, business cycles often ebb and flow more quickly than the rate at which companies change how they reward shareholders.
And given the performance of Nvidia's stock in recent history — shares are up over 2,600% in the last five years against a 120% gain for the Nasdaq — the company appears to have little trouble incentivizing investors to own its stock.The dividend hike is a notable increase in how much Nvidia has committed to regularly pay out to shareholders.
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