There are many people who have heard about the NVDA stock split. It was a big event for the company and it was announced by both CEOs. Now the companies are trying to figure out what to do with the money that was gained in the split. Here are a few things you need to know about it.
A stock split is an announcement that a company has reduced the number of shares of its stock in order to increase the liquidity of its stock. While a split is not usually a negative event, it does have an impact on the price of the company's stock.
In the case of Nvidia Corp., the company announced a four-for-one stock split in July. The move was intended to increase the amount of shares available for purchase by individual investors and make them more accessible to employees. The company's next stock split will take place in 2021. At the 2021 Annual Meeting of Stockholders, shareholders will be asked to vote on the increase of the company's authorized share count. After the voting, the total number of shares issued will be raised to 4 billion.
Nvidia stock is also trading on a split-adjusted basis for the first time. This change will allow investors to buy and sell shares at lower prices. As a result, the company will have a larger market cap. A stock split is considered a positive signal for a company, but its effects on the value of a stock are not significant. However, it can spark optimism among investors.
Nvidia's stock has risen more than 110% this year. It is due in large part to the company's recent deal to purchase ARM. Another reason may be the company's growing demand from data centers.
The company's second quarter guidance looks for sales gains of 3% to 7%. Analysts expect earnings of roughly $7 billion this year. But growth will slow to single digit rates in the coming years, thanks to supply chain issues and rising costs.
Chipotle Mexican Grill
Chipotle Mexican Grill is a fast-casual restaurant chain. It specializes in burrito bowls and tacos. The company sells more than 50 million pounds of food annually. Chipotle is a name that resonates with consumers. This cult following has allowed it to weather the rising cost of food. Chipotle's earnings growth has been strong for the past decade, averaging 11% per year.
If Chipotle Mexican Grill splits its stock, the result would be a boost for the stock and investors. A split would also make it easier for more people to purchase shares. Chipotle's stock has been a strong performer, gaining nearly five times its value in five years. In the latest quarter, its comps rose by 10%.
With a P/E ratio of 43, Chipotle is trading at a reasonable price. However, the high price means that retail investors will have a harder time getting their hands on the shares.
The company has a cash position of about $761 million. Its net income rose by 30% in the most recent quarter. And management has shown interest in a share repurchase program.
Investors could be able to buy a fraction of a share of Chipotle at a discount if they hold the stock through the split. Some brokers will allow this, but others may not. For example, a fee not covered by the whole share price may be imposed. Chipotle is a strong company with great growth opportunities. With a potential stock split, it could benefit from both the increased liquidity and the positive press it could get from employees and investors.
However, it hasn't announced a stock split in the last 16 years. It hasn't been easy for Chipotle to administer its employee stock compensation program.
Tesla, Inc. announced on March 28, 2018 a proposed three-for-one stock split. During the company's annual shareholder meeting, investors approved the move. The split was intended to make the stock more affordable for retail investors. In June, the company's stock price climbed 60% after the announcement. Its stock has since risen more than 81%.
Today, the company's shares trade at a 14% premium to their pre-split value. That's not a bad deal. However, the stock has been down 15% so far this year. If you're interested in a stock with a high dividend, you may want to consider Tesla. While it remains expensive compared to legacy automakers, the stock has a solid growth record and its stock price has a chance to rise over the next few years.
The stock's price could also benefit from its status as a blue chip in the eyes of rating agencies. There are many factors to keep in mind, including its status as a leading developer of electric vehicles and energy storage solutions.
Tesla also plans to invest in more gigafactories, which will boost production of its vehicles. The company expects to build and sell at least two million vehicles a year by 2022.
The company also plans to launch a robotic humanoid called the Tesla Bot. This will enter production in the next few years. In addition to the stock's most important financial measures, a stock split can also improve liquidity. Many of the new shares are available to smaller investors.
Although the 3-for-one stock split isn't the company's first, it is the second to take place in the past two years. The last time a stock split took place was in 2020.