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Amazon stock to trade at split-adjusted price after the 20-for-1 stock split

Investors will now speculate that holding the shares would accrue more profits if the stock price had to jump in the coming days.

Amazon share split, date, stock, ratio, split-adjusted price
A stock split doesn’t make any changes to a company's valuation, nor does it impact an investor’s equity.

Amazon stock with the split-adjusted price has started trading. Amazon share price post the split is around $123. The company had announced a 20-for-1 split of the Company’s common stock which means for every 1 Amazon share held, the shareholders will now have 20 shares in their account. In other words, every Amazon shareholder holding 1 share as on May 27 gets 19 additional shares credited to their account. The trading of Amazon stock with split-adjusted price begins 6 June, Monday. On Friday, Amazon stock price closed at $2,447.00 after dropping nearly 2.52 per cent over previous day’s closing price.

“As Amazon (AMZN) goes for its 20-for-1 stock split on June 6 after shareholders’ recent approval, its stock will trade with the new split-adjusted price from Monday. Investors who held the company’s shares on or before May 27 would be eligible for the stock split. New buyers will source the shares from sellers who owned the stocks before May 27. Hence, the eligibility would pass on with the shares,” says Kunal Sawhney, CEO of Kalkine Group.

As Amazon share price becomes more affordable than before, a new set of investors may emerge looking to own the company’s stock. “A stock split usually increases the liquidity of the shares making it accessible to more investors who aren’t comfortable buying pricey stocks. 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,” says Sawhney.

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,” adds Sawhney.

Those investors who want to hold Amazon stock for a long term may find this opportunity to buy the shares at a lower price. Sawhney feels, “Investors will now speculate that holding the shares would accrue more profits if the stock price had to jump in the coming days. Depending on the portfolio, it is an individual decision of an investor to act accordingly during a stock split.”

Amazon is traded on the Nasdaq stock exchange under the ticker symbol AMZN. Amazon went public on May 15, 1997, and the IPO price was $18.00. Amazon stock split history shows there have been several stock splits in the past as well.

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