NVDIA & Other Stock-Split Precedents

Preparing for the Stock Split

Last fateful Friday, and for the first time this cycle, I shorted NVDA at $1130 and sized it into a 5% position. The position is currently offside by 6% “only”, yet in the brief history of Shrubstack never has such anguish being exhibited by such a move!

Fyi, I wrote 2 extensive pieces on NVDA already (Part 1 here and Part 2 here), where I make it clear that I don’t have an interest in the stock. So why am I involved now?

The only reason I added a Short position now is to play an Event: The Event is the 10-1 stock split that will take place on the June 7th and become effective on June 10th.

As a side note, the last time I played an “event” in Semis was the S&P500 Index Inclusion of SMCI where I went short on the Inclusion. The short made 20% in a few days…good times…

Someone on Twitter went as far as to argue with me that the “Stock Split” is not an “Event”, which of course is ridiculous. Nvidia has a $3 trillion market cap and is the most important company in the world: if the CEO sneezes the stock moves, if the CEO wears a fuchsia leather jacket the stock moves, if the CEO signs breasts … yep, the stock moves. So you can bet that the stock will move on a 10-1 stock split!

We can be grateful to the said person however, because it prompted this analysis of precedent stock splits to show that stock splits do indeed have an impact! (h/t to Matt for the info).

In our analysis of “Trading Meme Tops”, we showed the parallel of Cisco in 2000, where Cisco’s stock-split coincided perfectly with the Nasdaq Top itself.

We gave an important caveat that we could still be in JUNE 1999 and not MARCH 2000. We are trading “Meme Tops” after all, so such “analysis” should be taken with a grain of salt!

Lets review a few other precedents of Stock Splits so we expand our sample size beyond just Cisco.