💰Amazon stock split | What is a stock split?

1 year ago
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💰Amazon stock split | What is a stock split? 💵Sign up for M-1 Finance : https://m1finance.8bxp97.net/yRPoQD - Companies typically engage in a stock split so that investors can more easily buy and sell shares, otherwise known as increasing the company’s liquidity. Stock splits divide a company’s shares into more shares, which in turn lowers a share’s price and increases the number of shares available. For existing shareholders of that company’s stock, this means that they’ll receive additional shares for every one share that they already hold.
“If your current stock is valued at $100 per share and there is a 2-for-1 split, you will have two shares worth $50 each,” explains Brian Stivers, investment advisor and founder of Stivers Financial Services.
Using Amazon’s 20-for-1 stock split as an example, existing shareholders will get 20 shares for each share they currently own. When a company divides each existing share into 20 new shares, that also means that each share is now worth one twentieth of the original value. The market value of the company, however, does not change.
In short, Amazon stock is going to become a lot more affordable to the everyday investor who wants in.
Amazon.com Inc. AMZN -0.93% said Wednesday that it would split its stock 20-for-1. Stock splits change the stock price and not much else, but they can be confusing anyway.
Stock splits rarely happen these days. Once nearly a given when shares topped $100 or so, stock splits have all but disappeared from the corporate playbook. Stock splits by companies in the S&P 500 faded from prominence after the dot-com bust in 2000, while those by companies in the Dow Jones Industrial Average are even less frequent.
The Amazon AMZN -0.93% split must be approved by shareholders—largely a formality-—and trading at the split-adjusted price is expected to begin on June 6.
What does the Amazon stock split mean for investors?
The total value of an investor’s Amazon holding won’t change. Shareholders as of May 27 will get 19 new shares for each share they own; after the split takes effect the market price for each share will be one-twentieth of the presplit price. Amazon shares are roughly $2,800 each now; at that level, shares would be around $140 each after the split.

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