Nvidia's stock plunge erases $118B in market cap
What event coincided with Nvidia's stock price drop?
Nvidia's stock price drop coincided with the company's 10-for-1 stock split and an options expiration event3. The stock split aimed to make stock ownership more accessible to employees and investors, lowering the price of each share, but not changing the overall market value of the company. The drop in stock price might also be attributed to investors taking profits after the stock's significant rally year-to-date and the broader market's sensitivity to Nvidia stock performance.
How much market capitalization did Nvidia lose?
Nvidia lost $118 billion in market capitalization as its stock plunged, causing it to lose its position as the most valuable publicly traded company. This comes amid the market's triple-witching Friday, which involves the expiration of individual stocks, indexes, ETFs, and options contracts.
What is triple-witching and how does it affect the market?
Triple-witching is the simultaneous expiration of stock options, stock index futures, and stock index options contracts on the same trading day1. It occurs quarterly on the third Friday of March, June, September, and December4. Triple-witching days can cause a spike in trading activity and volatility, particularly in the final hour, as traders close, roll out, or offset their expiring positions6. This can lead to unusual price movements in the underlying assets.