Which ecommerce site do you go when you want to find and buy some product?
As expected – Amazon, right?
However, we are not going to talk about what Amazon offers; rather, we will talk about the history of Amazon Stock Split, its implications, and comparison with some other giants like NVIDIA, Chipotle, Apple, and Tesla.
So, keep reading, keep learning!
Amazon Stock Split History
Since its establishment, there have been four stock splits of Amazon:
1. June 2, 1998 – 2-for-1 Split:
This was the very first split of stock by Amazon, which happened after a year since its offering as a public company on May 15, 1997. Prior to splitting, the closing price of Amazon was at $85.68. Following the splitting, shareholders got another share for each owned share, which made the post-split price to be approximately around $42.84.
2. January 5, 1999 – 3-for-1 Split:
Next year, Amazon staged a 3-for-1 split when shares closed at $354.96 before the split. After this split, every shareholder received two additional shares for each share they owned while the opening price was reduced to about $109.56.
3. September 2, 1999 – 2-for-1 Split:
Few months later, this split again doubled the number of shares outstanding. The stock closed at $119.06 before the split and opened at about $57.50 afterwards.
4. June 6, 2022 – 20-for-1 Split:
The recent split was of a different dimension compared to past ones. This split was expected to ease the cost of its shares since the price of Amazon stock had risen to that extent over time. The shares were trading above $2,000 before the split, and after splitting, they got an adjustment to around $100 per share.
Will Amazon Stock Split in 2024?
The chances that Amazon will do another stock split in 2024 appear low for several reasons:
- Recent Split History: The last split the company had was 20 for 1 in 2022. The current share price is pretty low, and up to April 2024 does not look like it has come close enough to the magnitude which would commonly typically usually call for another split.
- Price Range: The current trading prices for Amazon’s stock are still reasonably priced for retail investors. Hence, the main purpose of a stock split fades.
- Market Conditions: Going by the current situation of the market and the overall economic scenario, most companies are focused on achieving proper efficacy in their workings and planning long-term strategies for growth, rather than taking the way of the stock split.
Stock Split Comparison with Other Companies
Stock Split Comparison with Other Companies
NVIDIA Stock Split:
NVIDIA Corporation (NVDA) carried out a 10-for-1 stock split in June 20, 2024. The company did this at a time when the value of its common shares was fast rising due to a spurring demand for the firm’s GPUs, especially in gaming and data centers ones. At the time after the split, the stocks continued to appreciate because the interest of investors had become higher.
Chipotle Stock Split:
Chipotle Mexican Grill, CMG, company which had always avoided the stock split, even at this price of a share, traded over $2,400 as of early 2024.
Apple Stock Split:
Apple Inc. (AAPL) is one of the companies known to carry out regular stock splits as part of corporate strategy. The company split its stock 4-for-1 on August 31, 2020. Apple’s history has witnessed several splits aimed at retaining the company’s share price in an attractive value for retail investors and also as a demonstration of confidence in the company’s future growth trajectory.
Tesla Stock Split:
Similarly, Tesla Inc. (TSLA) believes in stock splits in providing easier access to investors. The company carried out a 3-for-1 stock split on August 25, 2022. Being in a similar position as Amazon, Tesla was also looking at the need to reduce the trading price of its shares to make it easily tradable and to be bought by more retail investors, with the increasing interest for electric cars.
Impact of Stock Splits
Investors are generally enthusiastic about stock splits since it may increase the liquidity and accessibility of shares while not affecting the company’s total market capitalization or intrinsic value. However, some critics argue that splits alone do not alter anything intrinsic, nor earnings per share (EPS), calculation, although they tend to lift trading volume and this increased retail interest.
Furthermore, firms that undertake stock splits often do so during high-performance periods or during periods with promises of high growth. That way, there will be perceived confidence among investors into prospects.
Conclusion
The history of Amazon stock splits illustrates how such corporate actions may offer increased access for retail investors and reveal management confidence regarding future growth. Speculation remains regarding another Amazon stock split in 2024. Comparing Amazon stock splits with other companies such as NVIDIA, Chipotle, Apple, and Tesla demonstrates that many high-performing firms use splits as management tools to keep investor attention and liquidity alive.
As we venture into 2024, it will be essential for investors to pay closer attention to announcements from Amazon and other tech giants on possible splits or corporate strategies in making investment decisions.
Therefore, it is of great importance to have a deep understanding of the effects of stock splits while choosing investments in his or her portfolio related to an ever-changing market environment.
