Amazon Stock Split: All Investors Need To Know

Amazon Stock Split

E-commerce giant Amazon split its shares in a ratio of 20-for-1 from yesterday. Amazon share price post the split is around $125. It is the company's biggest stock split and first such financial step in the past two decades. 

Stock Split News: 

  • Any shareholder with 1 Amazon stock on May 27th will receive additional 19 shares.
  • The stock has already jumped more than 20% since last Tuesday ahead of the stock split.
  • Amazon had a 2:1 split in June 1998, a 3:1 split in January 1999, and a 2:1 split in September 1999.
  • Stock jumped (up to 48% within a few weeks) post each of the 3-splits.

How a Split works:

  • The company divides its existing shares into multiple lower priced shares to boost liquidity, making shares more attractive to buyers.
  • The total dollar value of shares remains the same.
  • Google’s upcoming 20:1 split is set to execute on July 15.

Analysts View:

As per analysts, As Amazon share price becomes more affordable than before, a new set of investors may emerge looking to own the company’s stock. When a company splits its stock, it is a positive sign that the company is doing well. The growth prospects draw more investors which will invariably drum up the stock’s price 

However, stock splits may not necessarily bring any fundamental change in the company’s business and valuation. A stock split doesn’t make any changes to a company’s valuation, nor does it impact an investor’s equity. It is just lowering the unit price of a share. So, there isn’t any immediate repercussion of the Amazon stock split for investors to be wary of.

Amazon shares jumped 2% to $124.8 post the stock split yesterday.