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Blog: Amazon share is getting cheaper

Amazon announced a stock split in March 2022. This is the company’s first stock split since 1999. The opinions about a stock split are divided, but in general it is true that it makes a stock more accessible for investors.

Of course, sometimes there are possibilities to invest in a share via fractions, but some investors prefer to buy a ‘real’ share. For your imaging, at the time of writing (March 14, 2022) the Amazon stock is around $2,900. The stock split is a ’20-1 stock split’, so there will be 20 times as many shares, which will then have a price of $145. Still not the cheapest stock, but already much more accessible!

De opdeling en opties
And apart from the share, you know that many investors also work with options. An option contract relates to 100 shares. If an investor now works with ‘just’ one option contract on Amazon, this option relates to an underlying value of 1 x 100 x 2,900 = USD 290,000! By way of comparison, an investor with, say, 200 KPN option contracts would have an underlying value of around EUR 60,000.

In addition to better accessibility for investors and employees, there are several other reasons for a stock split. Due to the current high price in absolute terms, the share is not eligible for inclusion in the Dow Jones Industrial Average – as this leading index is a price-weighted index.

Nog even geduld

However, it will take some time before the ‘more accessible’ share is available to investors. First of all, the shareholders still have to give their approval. The stock split is then scheduled for the first Friday in June 2022, with trading in the new shares starting on Monday 6 June 2022.

The information in this article should not be interpreted as individual investment advice. Although Academy for Investors compiles and maintains these pages from reliable sources, Academy for Investors cannot guarantee that the information is accurate, complete and up-to-date. Any information used from this article without prior verification or advice, is at your own risk. We advise that you only invest in products that fit your knowledge and experience and do not invest in financial instruments where you do not understand the risks.

Taco te Gussinklo
Taco te Gussinklo is account manager at Hugo Investing (former BinckBank Spain) and is a passionate investor himself. In his columns he writes about his experiences on the stock market and the economy. If you have a question, mail to taco@hugoinvesting.com

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