Amazon stock split could draw retail traders in difficult market
Shareholders who have witnessed Amazon's stock price plummet this year may find some relief in Amazon's (AMZN.O) stock division.
Amazon shares rose 3.1% to $126.17 after the announcement of the 20-for-1 split earlier in this year, but which was effective Monday.
They have fallen 24% over the past year, which is roughly equivalent to the loss in Nasdaq Composite
Although a split does not have any impact on the company's fundamentals it can help boost its share price by making it more accessible to a wider range investors who want to own the stock.
Steve Sosnick (chief strategist at Interactive Brokers) stated that stock splits are associated with profitable stocks.
MKM Partners analysts believe that the anticipation of the split has aided the rise in Amazon shares over the past year, which saw them cut their loss for the year by a third.
Splitting stock options may increase investor access to options, particularly for stocks of high dollar value.
A trader who wanted to place a bet that Amazon shares would rise by 12% by July 1, for instance, would have to spend approximately $2,900.
Amazon is the latest megacap firm to divide its stock. Apple is just one of many companies to have split shares since 2020.