According to NVIDIA Corp's previous announcement, its 1:4 split plan will take effect today. After the split, investors who own one NVIDIA Corp share will receive three additional shares, and the trading price will be the split-adjusted share price.

As of July 19, NVIDIA Corp's market capitalization was as high as $460 billion, up as much as 40 per cent this year.

What is the impact on the company and investors when such a chip giant announces a split?

What is a split stock?

Split shares are made up of two words, namely, split shares and partnership shares.

Share split, also known as "split", refers to the division of a stock with a higher denomination into several stocks of lower denomination.

Give me a chestnut.

Xiao Zhang owns 10 shares of Company An at $50 each. When Company An announces its 1:2 split, Xiao Li's original 10 shares will become 20 shares with $25 per share.It was noted that the total value of Xiao Zhang's holdings of Company A shares had not changed, but the number of shares held had doubled.

So, when do we need to split shares?

In short, when the price of a stock is high, it will affect the trading volume of the stock and the desire of investors (especially retail investors) to buy. At this time, the company will consider the stock split to increase the liquidity of the company's stock. After the division of the stock, the shareholders' rights and interests remain unchanged, the total market value of the company remains unchanged, and the number of positions increases.

Next, let's look at the partnership.

A partnership, as its name implies, is the opposite of a split.When the stock price is low, in order to enhance the company's image, the listed company will merge the issued shares proportionally, that is, from multiple shares to 1 share. After the partnership, the share price increases according to the corresponding proportion, the shareholders' rights and interests remain unchanged, the total market value of the company remains unchanged, and the number of positions decreases.

With the above knowledge background, we move on to the next stage.

If I hold NVIDIA Corp's stock, what will happen to my position?

If you hold NVIDIA Corp shares before the opening of trading on July 20, 2021, your account will automatically complete the stock split before the opening of trading on the 20th, you do not need to take any action, and Futu will not charge any fee.

The specific adjustments are as follows:

For example:

1) if you hold 100 NVDA long shares, the closing price on July 19, 2021 is $750. after the split, you will hold 400 NVDA long shares and the share price will be adjusted to $187.5 per share.

2) if you hold-100 NVDA short shares, the closing price on July 19, 2021 will be $7500.After the split, you will hold-400 NVDA short shares and the share price will be adjusted to $187.5 per share.

If I hold NVIDIA Corp's option, what will happen to my position?

If you hold the NVIDIA Corp option contract before the opening of trading on July 20, 2021, your contract will be adjusted in accordance with the following rules:

For example, if you hold a NVDA call option NVDA210820C600000, the exercise price is $600. after the split, you will hold four NVDA call options NVDA210820C150000, and the exercise price will be adjusted to $150USD.

On the day of the split, will my trading be affected?

I would like to remind all investors of NVIDIA Corp that during the process of stock split, Futu willThe trading of the stock is prohibitedIs expected in theBefore the opening on July 20, 2021The processing is completed and open(note: the actual completion time may be delayed due to the limitation of upstream processing, please pay attention to the relevant announcement on the stock page).

Will split shares be an investment opportunity?

Looking back at 2020, there were two heavyweight technology stocks in the US stock market. On August 31, 2020, Apple Inc and Tesla, Inc. split their shares on the same day. After the split, the share prices of Apple Inc and Tesla, Inc. both reached new intraday highs, while Apple Inc closed up 3.39% and Tesla, Inc. closed up more than 12%.

Industry analysts said that stock segmentation usually does not have much impact on the market capitalization and valuation of listed companies, but will lead to a rise in share prices in the short term. The reason is that after the stock division, the proportion of the stock increases and the par value of the stock decreases, which is conducive to lowering the investment threshold and attracting more small retail investors with little capital to enter the market.