NEW YORK - Nvidia's plan to split its stock after the stunning rise in the chipmaker's share price could lure more interest from retail investors while potentially paving the way for the company's inclusion in the Dow Jones Industrial Average.
Although a split alone does not change a stock's valuation, market analysts said the lowered per-share value of the stock woos individual investors, who tend to trade in smaller lots due to their limited funds in comparison to institutional investors, who have deeper pockets. Still, while Nvidia's split, effective June 7, "should appeal to retail investors ... the value of the business won’t have actually changed," said Dan Coatsworth, investment analyst at AJ Bell.In an "FAQ" document about the stock split, Nvidia said: "Given the significant appreciation of the company’s share price in recent years, the stock split is intended to make stock ownership more accessible to employees and investors.
The split would reduce Nvidia's price to about $104 as of Thursday's price. That would make it the 21st-biggest stock in the Dow, just behind Merck and ahead of Walt Disney. Nvidia is the third-biggest stock in the market cap-weighted S&P 500. An S&P Dow Jones Indices spokeswoman said it does not comment or speculate on index additions or deletions.