The financial world is abuzz with excitement as Amazon, one of the tech giants, recently announced a stock split. This development raises a crucial question for investors: “Should I buy Amazon stock after the split?” In this blog post, we will analyse the reasons behind the stock split, evaluate its impact on stock prices, and emphasise the importance of learning stocks trading through a reputable stocks trading academy in this dynamic market.
Why Did Amazon’s Stock Split?
Amazon’s stock split on June 6, 2022, for the first time in 23 years. The company split its shares 20-for-1, meaning each shareholder received 20 new shares for every share they held before the split. The stock split did not change the underlying value of Amazon’s business, but it did make the shares more affordable for retail investors. After the break, each share of Amazon was priced at around $120, compared to approximately $2,400 before the split.
Market Expansion and Inclusion
Another significant reason behind Amazon’s stock split is the desire to attract a more diverse investor base. By reducing the share price, the company opens its doors to retail investors who may have found Amazon’s stock out of reach. This move aligns with the company’s commitment to democratising finance and fostering inclusivity within the stock market.
Strategic Manoeuvring
Beyond accessibility, a stock split often signals confidence in the company’s future growth. In Amazon’s case, it could be seen as a strategic manoeuvre to position itself for future market expansion and capitalise on emerging opportunities. The split may also respond to market trends and dynamics, ensuring that Amazon remains an attractive investment option.
3 Reasons One Should Buy Amazon Stock After Split
Amazon is one of the most successful companies in the world, and its stock has been a top performer for many years. However, the stock has also been very expensive, making it out of reach for many retail investors. The recent stock split has made Amazon shares more affordable, and there are now three reasons why investors should consider buying the stock.
- Amazon is a dominant player in the e-commerce market. Amazon is the world’s largest online retailer, and it continues to grow its market share each year. In 2021, Amazon accounted for nearly 40% of all online retail sales in the United States. Amazon’s dominance in the e-commerce market is a significant competitive advantage, and it is one of the reasons why the company is so successful.
- Amazon has a diversified business model. In addition to its e-commerce business, Amazon also has a cloud computing business (Amazon Web Services, or AWS), a digital media business (Amazon Prime Video and Amazon Music), and a hardware business (Amazon devices). This diversification helps to reduce Amazon’s risk profile and makes it less vulnerable to economic downturns.
- Amazon is a well-managed company. Amazon has a strong management team led by CEO Andy Jassy. Jassy has been with Amazon for over 20 years and has a deep understanding of the company’s business. Amazon’s management team has a proven track record of success, and it is one of the reasons why investors are confident in the company’s long-term prospects.
Effect of The Split on Stock Prices?
Stock splits do not have a direct impact on stock prices. However, there is some evidence that stocks tend to outperform the market in the months following a separation. This may be due to increased investor interest in the stock after a split, or it may be since stocks that split are often large, well-established companies with solid growth prospects.
In the case of Amazon, the stock has outperformed the S&P 500 since the split. However, it is essential to note that this is just a short-term trend, and there is no guarantee that Amazon will continue outperforming the market in the long term.
The Key Reasons Why Learning Trading Through a Trading Academy is Imperative
For several reasons, learning stocks trading through a reputable online trading academy like Queensway is imperative. Firstly, it provides a structured education, equipping individuals with essential market knowledge. Secondly, emphasis on risk management ensures traders can navigate the markets prudently, minimising potential losses. Lastly, the practical experience gained in simulated trading environments allows for hands-on skill development, offering a risk-free space to refine strategies. In the dynamic world of trading, a stocks trading academy serves as a crucial foundation, empowering aspiring traders with the tools and insights needed for success in the financial markets.
