Time to buy or it changes nothing?
While with the decline Amazon lost about 16%, which caused the company`s market capitalization to stand at roughly $1.4 trillion, but still at 2,785.58 (Wednesday closed price) the company share has almost doubled comparing the free-fall price after the COVID-19 pandemic.
And now with split news, it is again increasing. Yesterday we had a report that the company board approved a 20-for-1 split of the e-commerce giant`s common stocks, and top of that, they even authorized a $10 billion buyback plan. This news sent the company`s shares up 7% before closing with 2.40% at 2,785.58 US dollars.
In the past two years, some other tech giants also did the same after that their shares increased rapidly, including Google parent Alphabet, which did it last month, Apple Inc, Tesla, and Nvidia. For Amazon, it is happening for the first time since 1999. With these changes and splits, shareholders will get 19 more shares in exchange for any shares that they have. It is noteworthy that trading based on the new share price will begin on June 6.
Now, the question is whether it will be an opportunity to buy or it will not change the stock behavior? When we are looking at the history, we can see the market, and investor reaction to the Apple and Tesla split 4-for-1 and 5-for-1 respectively on the same day in August 2020, and the Nvidia split 4-for-1 in July 2021 we can see that investors, especially the retail investors have been more absorbed as stock prices fell. Most probably we can see the same reaction from Amazon Fans as well.
