Back in March, e-commerce giant Amazon [AMZN] announced that it would conduct a 20-for-1 stock split, and in May, shareholders voted to approve it. The split has now officially taken effect, but what has actually changed?
For every Amazon share that previously existed, 20 have taken its place. In turn, the price of each Amazon share has shrunk in proportion. One share of Amazon traded at $2,447 last Friday prior to the split, so dividing that number by 20 means the new share price is $122.35. But the market valuation of Amazon has remained the same, at $1.2 trillion, which makes the stock split entirely cosmetic.
Companies like Amazon do this because it makes their stock more accessible to smaller investors, and the hope is that their shareholder base broadens with some of these new buyers. But fundamentally, the case for buying shares in Amazon stays exactly the same, and here’s what it is.
The post Amazon’s Stock Split Has Taken Effect. Now What? originally appeared at The Motley Fool.