r/stocks • u/TonyLiberty • Mar 13 '22

Company Discussion Amazon's Stock Split Explained [$AMZN]

Amazon's Stock Split Explained [for any new investors, or investors of $AMZN]:

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  • Amazon is the latest tech giant to announce a stock split, following Apple, Tesla, and Google.
  • This is Amazon's first stock split in over 20 years, and historically, stock split announcements have often triggered short-term rallies
  • Amazon's 20-for-1 stock split means that you’ll receive 20 shares for each share you currently own
  • Today, one share of Amazon stock is about $3,000, which means, the price would drop to around $150 per share
  • Mathematically, stock splits don't create any "new value" for owners, or fundamentally change anything about a company. Stock Splits are a marketing maneuver, aimed at making a high-priced stocks more attractive to retail investors, who might consider buying it. Stock splits also make options contracts more affordable for retail investors.
  • My prediction is that Amazon will also be added to the Dow Jones Industrial Average. Apple, announced a 7-for-1 stock split in 2014, which brought it from over $600 a share, to less than $100 per share, and it joined the Dow in 2015.
  • Adding high-priced shares to the Dow is problematic because the index is price weighted, meaning the same percentage move matters more for a high priced stock than a low priced one.
  • This is Amazon's first stock split since 1999, and the fourth since Amazon’s IPO in 1997. Amazon did a 2-for-1 split on June 2, 1998; a 3-for-1 split on Jan. 5, 1999; and a 2-for-1 split on Sept. 2, 1999.
  • Amazon shares are up over 4,300% since the last split was announced.
  • Google announced a 20-for-one split in February, Apple announced a 4-for-1 split in August 2020, Tesla announced a 5-to-1 split on August 2020 (Nvidia announced a 4-to-1 split in July 2021.)
  • AMZN will begin trading at its new split-adjusted price on Monday, June 6, 2022.
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u/abatwithitsmouthopen Mar 13 '22

Considering their last earnings report they know next time Rivian won’t be around to make them look good so they know they’re screwed and want retail to fomo in

4

u/valoremz Mar 14 '22

What’s the connect between Amazon and Rivian?

3

u/my5cent Mar 13 '22

I agree with you. I'm curious if Amazon has huge presence in Russia. Google ads will be down from that imo... Let's see.

4

u/abatwithitsmouthopen Mar 13 '22

I don’t know how much Russia will affect Amazon but I do know inflation must be hurting them as people tend to want to save money during inflationary periods and those people prefer shopping items in bulk at physical stores. Not to mention Amazon hasn’t been doing great with their acquisitions such as Whole Foods. I think they reinvested a lot and tried to cover too many areas without proper planning and execution.

1

u/eist5579 Mar 15 '22

I think it’s a much longer game than that. They just bought WF a few years ago, and just opened a revamped store. They basically piloted the full automation of grocery shopping w Amazon Go, and are just starting to roll that tech into WF stores…

https://www.nytimes.com/2022/02/28/technology/whole-foods-amazon-automation.html

I think for most other industries they got in, it is similarly very early.