![]() Many companies see stock splits as a way to attract investor interest and give their share price a boost, at least temporarily. However, the lower share price does make the stock more affordable to a wider number of investors and that could lead to increased buying. The company held its initial public offering (IPO) back in 1997 when Amazon’s stock began trading at $1.73 per share.Īs mentioned, the stock split does not change anything about Amazon’s operations or its finances. AMZN stock also split on a 2-for-1 basis in June 1998, and on a 3-for-1 basis in January 1999. Amazon’s share price had risen more than 4,000% since its last stock split more than 20 years ago just before the dot.com bubble burst. The last time Amazon’s stock split was in September 1999, when it split on a 2-for-1 basis. ![]() This is the fourth time in Amazon’s history that the company has split its stock. Prior to today, the company’s stock had fallen more than 30% this year, dragged lower by disappointing earnings reports and the broader market selloff in technology securities. However, the rally in AMZN stock that followed news of the split was short-lived. News of the split was greeted enthusiastically by investors and analysts, many of whom had been lobbying for years for the Seattle-based online retailer to lower its share price through a stock split. The last time Amazon’s share price was this low was in 2010 coming out of the 2008-09 financial crisis.Īmazon announced on March 9 that its board of directors had approved a 20-for-1 stock split and that the shares would begin trading on a split adjusted basis today (June 6). ![]() But following last Friday’s split, people can now buy the stock for less than $125. It had been as high as $3,773.08 per share a year ago, putting them out of reach for many smaller investors. Last Friday, AMZN stock was trading at more than $2,000 per share. While splits don’t change the financial performance or underlying fundamentals of a publicly traded company, they do make the shares more affordable to a broader range of investors, notably individual retail investors, and that can lead to increased buying and a rally in the stock. Want more insights? Our newsletters offer the very best from Morningstar, directly to your inbox.E-commerce giant Amazon (NASDAQ: AMZN) underwent a 20-for-1 stock split after markets closed last Friday, bringing its share price down to $122.35, the lowest level it has been at in 12 years. This article was updated to correct Amazon's fair value estimate to $192 per share from $192.50. If that passes, it will be the electric vehicle maker’s second split in three years. Tesla ( TSLA) is also planning to put another split to a shareholder vote during its annual meeting on Aug. Alphabet ( GOOGL)/ ( GOOG), Google’s parent company, disclosed plans for a 20-1 stock split for both its Class A and C shares in February, which will take effect on July 15. Since these segments earn materially higher margins than the rest of the business, we also expect them to drive margins higher over time." Upcoming Stock SplitsĪmazon is one of several big-name tech and consumer companies planning to split its shares. Critical growth drivers over the medium term will be AWS and advertising. "We further expect Amazon to gain share online. "Over the long term, we expect e-commerce to continue to take share from brick-and-mortar retailers," Romanoff says. Morningstar considers Amazon to be a wide moat stock, which means it has a durable competitive advantage. Following the split, Morningstar's fair value estimate for was also divided by 20, which would value the company at $192 per share.Īs of June 1, the company was considered 37% undervalued. The split won’t affect Morningstar senior analyst Dan Romanoff’s view on the company, which he valued at $3,850 per share before the split. ![]()
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