Wednesday, the market was on pins and needles awaiting the evening release of NVIDIA Corp’s (NASDAQ: NVDA) third quarter earnings…
NVDA is the top AI semiconductor chip developer in the world so its revenues, demand projections and other metrics serve as a kind of thermometer for the rest of the AI industry...
When NVDA has an announcement to make, the rest of the world perks up its ears.
And the company didn’t disappoint. Its quarterly sales tripled year over year, net profits increased seven-fold, demand is on fire for its chips…The news really couldn’t have been any better.
NVDA reported record revenues and earnings Wednesday night and the market reacted accordingly.
The only real problem with NVDA is that we love this company but the stock is financially out of reach for many of us…Along with sales, its price also tripled over the last year.
This is not a day trader’s stock and it’s way too expensive for the average Joe.
NVDA is currently trading at over $1,000 per share.
Take a look at the NVDA 12-month chart below.
NVDA 12-month Chart; 1-Day Candles; Courtesy Steady Trade
Apparently NVDA felt our pain, that there were too many investors being left out in the cold because of its elevated price.
In response, the company also announced yesterday that it will execute a 10-for-1 stock split.
According to CEO Jensen Huang, the company wants “to make stock ownership more accessible to employees and investors.”
So how will this work?
With a 10-for-1 split, each existing shareholder will receive nine new shares for every share they already own.
And this won’t happen until after the market close on June 7th. That’s a Friday so on Monday, NVDA will begin trading on a split-adjusted basis.
What’s most important about the split is that the stock price will begin trading at a price that is 90% lower than where it was on Friday afternoon.
Why?
Because we’re now dividing the value of the company over a larger number of shares…In fact, the economic value of an investor’s NVDA holdings will not change from Friday’s close to Monday’s open.
To learn more about the mechanics of stock splits, read my article.
But what happens after the open on June 7th is anyone’s guess.
However, a lot of research based on past splits suggest the stock will experience some sort of pop because the price is lower and will attract more buyers.
But will this now be accessible for us? Will it become a day tradable stock?
Probably not. Let’s do the math.
By the way, if you’re not familiar with day trading, get the basics here.
If we were to take NVDA’s price from yesterday’s close, $1,037.99 per share, and divide it by ten, we end up with a post-split price of $103.80 per share…
Yes, that number is much lower than $1,037.99 and a number that’s much closer to our comfort zone, but it’s still not in a range that fits my Daily Income Trader strategy…
My service trades low-float, very low-priced stocks and NVDA will be neither of these in the foreseeable future.
However, we do make money very fast and we are guided by proprietary trading tools, like BreakingNews Chat, that you get access to as a Daily Income Trader member.
You also get access to five daily live webinars, including my Premarket Prep, my Weekly Squeeze Report, and more…
Read my recent blog post to learn more about the Weekly Squeeze Report.
And check out Daily Income Trader here to see if it’s right for you.
Don’t be let down if NVDA is still out of reach for you. I have a massive watchlist of AI stocks that ARE accessible to most investors and fit my trading system.
To learn more about those names, hear more NVDA talk, and everything else that has been happening in the markets, tune into my free live webinar tonight at 8 pm Eastern.
Have a great day everyone. See you back here next week.
Tim Bohen
Lead Trainer, StocksToTrade