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NVDA ETF just split 6 for 1, is Nvidia stock split next?

Published 03/15/2024, 10:10 AM
© Reuters.

Artificial intelligence (AI) bulls have been flocking to an exchange-traded fund (ETF) that doubles the return on Nvidia (NASDAQ:NVDA) stock as trading volumes and inflows surge to record highs. The ETF, GraniteShares 2x Long NVDA Daily ETF (NVDL), recently carried out a 6 for 1 stock split, after pulling in more than $1 billion year-to-date. The strong interest in NVDL comes amidst the unrelenting growth of NVDA stock.

After crossing the $900 mark recently, many are increasingly wondering whether the chipmaker itself is considering a stock split.

Nvidia ETF split announced

Last month, global ETF issuer GraniteShares declared a 6 for 1 forward stock split for the NVDL ETF, a fund designed to offer investors twice the daily return of Nvidia stock.

This split did not impact the total market value of the outstanding shares. Post-split, the number of outstanding shares increased by approximately 500%. The split took effect on March 13.

NVDL, also referred to as the Nvidia ETF, has seen its assets surge to $2 billion amid growing investor enthusiasm for AI companies.

This year alone, the fund has attracted $1.02 billion in investments, with a significant $545.8 million influx on March 11, as reported by etf.com. Coupled with an almost triple price increase this year, the ETF’s assets under management have reached $1.98 billion by early March 13, per Bloomberg data.

NVDL surged more than 170% year-to-date as the relentless rally in Nvidia stock continues. The chipmaker’s shares are already up 75% as tech companies scramble to buy more of high-end semiconductors designed for AI applications.

“It took less than two weeks for NVDL to go from $1 billion to $2 billion in AUM, which is an insanely rapid ascent,” etf.com senior analyst Sumit Roy said.

“About 70% of the increase was a result of inflows, while the rest came from the continued surge in shares of Nvidia, and by extension, NVDL.”

Nvidia stock split next?

Apart from NVDL, some market participants are anticipating a potential split in Nvidia stock itself.

Mahoney Asset Management CEO Ken Mahoney recently told Bloomberg News that they expect a stock split in the chip giant over the next year.

"Probably in the next year or so, I expect the stock to split and that would be able to get some small retail investors into the stock where they think it’s out of reach right now," Mahoney said.

The last time Nvidia announced a stock split was in May 2021, when its shares were trading around the $600 mark. When executing a four-for-one split, the company said its intention was to "make stock ownership more accessible to investors and employees."

Companies often split their stock to reduce the share price, making it more appealing to a wider investor base.

This strategy aims to improve trading activity and increase the stock's liquidity, allowing for swift trade executions—a crucial aspect for large-scale institutional investors.

High investor optimism that elevates stock prices can prompt considerations for a split, influenced by market sentiment and speculative behaviors.

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