Amazon executed a 20-for-1 split for its stock over the weekend, going from $2,447 a share to roughly $122 a share.
What it means: According to USA Today, “Amazon shareholders got 19 additional shares for every one they owned before Monday.” While the amount of shares technically increased, their share value remained the same.
Is this a good thing? Yes, it is. USA Today reports “stock splits are a good sign because they mean that a company has done so well over time that the price of a single share is too expensive for an average retail investor.”
- Amazon’s stock split and consequential lower share price makes it a lot more attainable for someone to own an entire share.
- Bank of America reported that stock splits potentially result in higher returns, saying, “S&P 500 companies that announced stock splits since 1980 have returned an average of 25.4% over the following 12 months, versus the S&P 500’s average return of 9% over the same period,” per Yahoo Finance.
So, should I buy more Amazon stock? Well, since research states stocks typically go up after a split, the best time to have bought Amazon stock would have been before the split.
- “Long term, the stock is still a great investment. … Investors would be smart to buy shares on the dip and hold them in their portfolio for the long haul,” Baglole told Investor Place.
- Moadel echoed Baglole’s strategy of long-term investing, saying, “Investing in tech titans can be a sensible strategy for the long run. … Don’t hesitate to grab a few Amazon shares today — it should be easier now that they’re cheaper,” per Investor Place.
By the numbers: As of Monday evening, Amazon stock is up almost 3%.
- Amazon has a market cap of $1.269 trillion as of June 2022, making them the world’s fifth most valuable company, according to Companies Market Cap,