The Details On The Amazon Stock Split And Buybacks
Amazon, which originally announced the stock split March 9, will give each shareholder 19 additional shares for each share held on June 3. The company said AMZN stock will begin trading on a post-split basis on June 6.
Based on current levels, shares would go for just under $107 apiece following the Amazon stock split. That should make AMZN shares more attractive to retail investors currently put off by the four-figure sticker price of more than $2,100.
“This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company,” an Amazon spokesperson said.
Despite what the textbooks say, the market lovesstock splits. And that continues to be true even in an age when brokers are happy to sell clients fractional shares for free.
After all, splits might give traders and investors more flexibility, but they have absolutely zero impact on a company’s fundamentals, prospects or its shares’ valuation. That’s because a split is essentially the same thing as making change. In this case, shareholders will effectively be swapping a $20 bill in return for 20 $1 bills.
However, a $10 billion share repurchase program, also announced back in March, is another matter entirely. It replaces Amazon’s previous $5 billion stock repurchase authorized in 2016. The company bought back $2.12 billion of its shares under that plan.
Will Amazon Stock Go Up
As of 2 September 2022, 38 of 39 analysts surveyed by TipRanks rated AMZN stock a buy. However, these opinions should not be considered a recommendation to invest or trade as many factors not accounted for in these predictions could affect the actual performance of AMZN. Always conduct your own analysis before trading. And never trade money that you cannot afford to lose.
Why Investors Care About Stock Splits
A company executes a stock split by issuing additional shares to current shareholders, based on how many shares those investors already own. In a 2-for-1 split, investors receive two shares for each share they already own. A 3-for-1 split triples the share count.
As the term split implies, the value of the companies shares is divided by the corresponding amount. A split does nothing to change the overall value of the company or the total value of the shares any investor holds. If you held a single $10 share of stock before a 2-for-1 split, youd have a pair of $5 shares afterward.
A split doesnt change the intrinsic value of a company, Sekera says. It doesnt matter if you have 340 shares at $1,000 or 1,000 shares at $340.
There are a few probable reasons why Amazon decided to head to splitsville. Increasing the number of shares and making them cheaper means that more people potentially have access to the stock. Given Amazons near $3,000 per-share price tag, those who cant or dont trade partial shares of stock may be at a disadvantage when it comes to investing in the company.
Lowering its price per share may also allow Amazon to become part of the Dow Jones Industrial Average, says Neil Macneale, publisher of stock split newsletter 2 for 1. Because the Dow is price-weighted, with the highest-priced stocks occupying the top spot in the index, stocks that are too expensive cant be included.
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Amazon Stock News And Price Drivers
As of 2 September, has slid 26.19% YTD. Negative sentiment toward equities that started back in November 2021 continued into the first semester of 2022, driving the companys stock price down.
A combination of negative macro factors, rising geopolitical tensions in Europe and still relatively complicated supply-chain dynamics are affecting the companys prospects.
In late April, Amazons stock fell 14% on the day the company released its financial results covering the first quarter of the 2022 fiscal year. Back then, the company reported a $3.8bn net loss due to a $7.6bn markdown of its investment in Rivian the electric vehicle startup in which the company has a large stake.
On 3 June, David H Clark, Amazons CEO for Worldwide Consumer, resigned from the company. The timing of Clarks departure means changes in the leadership team at a point when operational conditions for the business are complex.
Referring to Clarks departure, Amazon CEO Andy Jassy said: The past few years have been among the most challenging and unpredictable weve faced in the history of Amazons Consumer business, and Im particularly appreciative of Daves leadership during that time.
Amazon also announced the closure of its Amazon Care project in late August a plan to provide a health platform to patients. In a memo sent out to employees, Amazon health services head Neil Lindsay said that is not a complete enough offering for the large enterprise customers we have been targeting.
Prime’s Impact On Amazon
Amazon is a juggernaut. Even though Prime Day sales of $12 billion in 2022 seem impressive. It is worth noting that the total revenue for this company in 2021 was $469,822,000. $12 billion is less than 3% of its total revenue. From this perspective it makes sense that the impact of Prime Day sales on the company’s share price would be insignificant at best.
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Amazon Stock Price How Much Is Amazon Stock Worth
Amazon now has since surpassed a market capitalization of over $1.7 trillion. Amazon became a publically listed company on the NASDAQ in 1997, with an initial IPO price of $18. This would be more like $1.50 per stock taking the companys three stock splits in the 1990s into account.
If you had allocated $1,000 to Amazon when stocks first hit the NASDAQ, your investment would be worth over $2.2 million at the time of writing. Over the last five years of trading, Amazon has outperformed the NASDAQ Composite. Amazon stocks have increased in value by over 280%, whereas the NASDAQ Composite has risen by 143% in the same period.
Amazon stock plunged in early 2022 but is now showing signs of recovery. Stocks have risen 20% from $2,720 to $3,380 since March 8, the day before Amazon announced a 20-for-1 stock split a gain of just over 24% in around two weeks. On June 6, 2022, the most recent stock split will take effect.
Amazon Market Capitalization
At the time of writing, Amazon is in the top 5 companies in terms of market capitalization, alongside the likes of Microsoft, Saudi Aramco, Google and Apple. At this time, Amazon carries a market capitalization of over $1.1 trillion.
Amazon Index Funds
Amazon is a member of multiple indices. This includes the NASDAQ Composite and NASDAQ 100, the S& P 100 and 500/Consumer Discretionary, and the Russel 1000 and 3000.
EPS and P/E Ratio
How Have Amazon Stocks Performed
When Amazon made its initial public offering in 1997, its share price was $18. Investors who got in at the IPO stage would have been very pleased as Amazon stocks have skyrocketed since. In fact, before the company did a 20-for-1 stock split in March 2022, their share price was in the thousands. At the time of writing, Amazons share price is hovering around USD$130. The online retailer reached the trillion-dollar market cap milestone for the first time in 2018 and again in 2020.
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A Closer Look At Amazon’s Valuation
Amazon stock is currently trading at 52 times trailing earnings. While that’s higher than the 42-times earnings multiple Amazon was trading at before the stock split announcement was made, it is lower than last year’s average earnings multiple of 65. What’s more, Amazon stock is trading at a nice discount to its five-year average price-to-earnings ratio of 128.
So, investors who haven’t bought Amazon yet still have an opportunity to do so as the stock is relatively cheaper than before. Also, historical trends suggest that the split could give the stock a nice boost. Bank of America Global Research data suggests that stocks generate average returns of 25% in the year following a split announcement, beating the overall market’s gains of just 9%. The gains in the consumer discretionary, technology, and healthcare verticals could range between 26% and 38% in a year following the announcement of a stock split.
Now, Amazon stock has already gained impressively since announcing its stock split, but it won’t be surprising to see it head higher in the long run on account of the secular growth opportunities it is sitting on. Analysts expect the company’s earnings to increase at an annual rate of 35% for the next five years, which makes the stock an enticing bet right now given its relatively attractive valuation.
Is Amazon A Good Stock To Buy
Amazon is a company with a robust balance sheet, a highly diversified business model and a capable management team. The valuation of the business is experiencing a decline amid short-term headwinds but its fundamentals remain strong. Whether AMZN stock is a suitable asset depends on your own trading objectives and the opinion based on your own research. Remember, its important to reach your own conclusion of the companys prospects and likelihood of achieving analysts targets. Past performance is no guarantee of success. And never invest money that you cannot afford to lose.
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Amazon Stock: Should You Buy It In August
- Publish date: Aug 5, 2022 7:15 AM EDT
Amazon – reported better-than-expected results in its second-quarter earnings release. The news for nearly every single aspect of Amazons business was almost too good to be true: The e-commerce segments had nearly zero losses, and Amazon Web Services remained a safe profit generator.
However, Amazon reported another bottom-line miss. But this time, Rivians – Get Rivian Automotive Inc. Report performance was to blame. Amazon’s stake in the automaker caused it to lose nearly $6 billion in non-operating income.
In the end, investors seemed pleased. Shares have climbed over 14% since the earnings report. So is August the best time to purchase some AMZN shares?
Figure 1: Amazon Stock: Should You Buy It in August?
The Risks Of Investing In Amazon
Are Amazon shares safe?Investing in single shares is never a safe investment, here are the biggest risks around Amazon stock:
Uncertainty about future profits: Amazon operates on very tight profit margins: Amazon it is extremely profitable now but it has not always been the case. In 2012 and 2014 it lost money while growing.
Slowdown in profit growth: Amazons growth has been spectacular. It should be remembered, however, that this growth is slowing down.
Competition: Competition is Amazons toughest operational risk. The retail industry is immensely competitive and Amazons competitors are no slouches. Amazon is winning the battle, but it is still a battle.
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Is It A Good Time To Buy Amazon Stock
Although its doing everything it can to weather the storm, Amazon isnt immune to the market conditions pummeling everyone else. The company took massive losses like everyone else as panic selling took over Wall Street and institutional investors and politicians alike rushed to save their respective fortunes.
This mass sell-off lowered prices across the board, and that puts a deep discount on a lot of stocks that were previously unattainable.
Amazon is one of them all signs show that the company will not only survive this market crash, but itll also continue to thrive. It has been steadily expanding its physical and digital footprint while optimizing logistics. Make no mistake Amazon is a very powerful company.
Everything Amazon has strong investments in is being used during the economic slowdown: streaming video, grocery delivery, e-commerce, and pretty much anything online. In fact, Netflix, Twitch, , LinkedIn, BBC, ESPN, and more all spend millions each month on .
Amazon will continue to be affected by general market conditions, but it is in no danger of going out of business anytime soon and will likely be one of 2020s biggest corporate winners.
Positioned For Success As Covid Subsides
Amazon stock bulls, however, think the company is positioning itself for even greater success as the world emerges from the effects of Covid-19.
“In our view, Amazon is uniquely positioned to exit this crisis as one of the biggest beneficiaries of accelerated digital transformation,” Monness Crespi Hardt analyst Brian White said in a recent note to clients.
In a sign of things returning to normal at Amazon, its annual sales extravaganza known as came back to its regularly scheduled dates, following a number of earlier schedule changes previously caused by the coronavirus pandemic. Amazon is reportedly adding another Prime Day event in the fall.
Another significant event during the second quarter came when Amazon announced it will acquire One Medical for about $3.9 billion, including debt. It’s the e-commerce company’s largest expansion into health care services. One Medical is a technology-centric primary health care business.
Amazon’s acquisition of One Medical is its largest push yet into the health care business, which began with its acquisition of PillPack four years ago for a reported $1 billion. That gave Amazon the ability to ship prescription drugs around the country. In the past few years Amazon has expanded into the health care market.
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Is It Safe To Invest In Amazon
Amazon is an extremely solid and diversified company at the moment. This suggests that it is relatively safer than others. If we consider it a safe bet, maybe its not too late to buy Amazon shares now.
I mention the term safety but dont take my word for it, because investing in shares is never safe, even if we are talking about Amazon, which is one of the biggest and strongest stocks in the world. It is not safe 100% and, taken alone, it is not the best investment ever.
How To Invest In Amazon With Uphold
Forget using complex equity trading platforms – Uphold makes it easy to buy Amazon shares, as well as many other top stocks. You can also buy cryptocurrencies, stablecoins, national currencies, and precious metals.
Do you want to invest in AMZN with USD? You only need a verified Uphold account to buy Amazon shares fast.
Heres how easy it is to get started:
You can then fund your account with your debit card, credit card, bank account, or crypto deposit.
Your Uphold account can be used to make payments to vendors, send money to friends on the other side of the world, and more.
Upholds unique Anything-to-Anything trading experience will make any exchange a seamless process, all commission-free.
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How Much To Invest In Amazon
One of the most important things you need to think about before investing is how much money you can afford to put into Amazon shares today.
The answer should never be all the money I have. This is because the stock market is considered a dangerous and long-term investment.
So, if it is not too late to buy Amazon stock, how much to invest?
Traditional financial experts generally advise against buying any stock with money you think you might need within the next five years. Before buying single stocks, it is also wise to make sure you have an adequate emergency fund and to save consistently.
Most brokers do not allow for stock splits, so one single Amazon stock costs about USD 3000 or more. This is something to think about.
An alternative way to buy Amazon shares in small chunks would be to use CFDs. I dont like CFD especially if my goal is long term, but on this website youll find it as a way to invest in Amazon with little money .
How To Buy Amazon Stocks In 2022
Leading online retailer and tech giant Amazon is one of the most popular companies and has a market cap in excess of $1 trillion.
In this guide, we explain how to buy Amazon stock in 2022.
We also reveal where to buy Amazon stock by reviewing the popular brokerage sites to execute your trading order and talk about the potential benefits and pitfalls of investing in Amazon.
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Regularly Review Your Investments Performance
Whether you invest in just one company or hundreds, its a good idea to review your investments performance on a regular schedule, whether thats monthly, quarterly or annually. That way, you can see how your account is doing and evaluate whether you need to make any adjustments.
To judge how your Amazon investment is performing, you can compare its performance to those of benchmark indexes, like the Nasdaq 100 or S& P 500. You might also track the financial data provided in its public filings to gauge how Amazon handles its finances over time.
Is Amzn Stock A Buy Sell Or Hold
We believe there is a good chance AMZN ends up trading higher over the next several months. We rate AMZN as a buy with a price target for the year ahead at $2,730 representing a 50x P/E multiple on the current 2023 consensus EPS. Ultimately, we see room for the company to outperform what is now a low bar of expectations. The stock has been punished enough that valuation looks attractive for what is still one of the strongest companies in the world.
Today or this week might not be “the bottom”, but the current level looks like a good spot to either start a new position or average down. The main risk would be a deeper deterioration of the macro outlook forcing further revisions lower to growth and earnings estimates. Of course, there are always risks but it’s the bears and short sellers that need to start sweating.
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