Everything You Need To Know About The Amazon Stock Split
In rich bitch news this week Wallstreet is pumped as Amazon (AMZN) announced its 20 for 1 stock split on Wednesday, March 9, 2022
This is the first stock split since the dot-com boom, telling investors on Wednesday that they’ll receive 20 shares for each share they currently own. The stock then soared 6% in extended trading! Holly yacht balls Bezos!!
Well while Bezos is getting richer by the minute and sailing around on his w/ 20 somethings what does this actually mean for you?
Amazon stock has been hanging out around $3,000 range. So if you don’t have 3K laying around you are SOL my friend and can’t buy any. Until now…well until a few weeks from now when the split happens. But let’s be clear a stock split does NOT mean the stock is lower in value and is “on-sale” as in when a stock goes down in price. It means they are taking 1 share at $3K and dividing the share by 20. So whatever the stock price is at when the split actually happens that will be the price you can purchase a 1 20th of a share for. You will not own a whole share however this will make it feasible for more people to purchase the stock since it should fall in the $150 range after the split. Think of it like having a $20 bill vs. 20 $1 bills. You will likely see the news hyping the eff out of this therefore more people will likely buy and inflate the price. A company splitting its stock does NOT change the value of the company or the stock. Why do companies do a stock split? Lots of reasons, according to Forbes “it will 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.”
Another reason to keep in mind is the more people that have the ability to purchase the more the stock goes up, the rich get richer and Bezos buys more yachts.
So should you buy?? Ahh the question of the hour. Ok first rule of investing is we don't buy things we don’t understand (I will beat this into you if you stick with me long enough ;) I am fairly confident you understand what Amazon is as its likely packages magically show up at your doorstep every couple of days from them like at my house.
But does that mean it’s a good buy? That is for you to decide. Single stocks can go up and go down. No one has a crystal ball to see into the future. If we did we would all be millionaires and capitalism would be over. We can make educated guesses along the way and things can still go sideways…do I need to remind you about BIG and the Peloton? If you don’t know what I am referring to that’s a story for another day.
I don’t think Amazon is going anywhere any time soon but that doens’t necessarily mean the stock is a good buy. It all comes down to what your financial goals are. I personally only invest money in individual stocks that I am ok with losing the money. There is nothing wrong with buying the stock but it just depends on your personal risk tolerance and how well you can handle a little volatility that comes with the territory of owning individual stocks.
Since this will get a lot of media attention and hype my guess is the stock will start to creep up as it has been since Wednesday when they announced the split and then come back down. But if you want to roll the dice more power to you! And if you want to play it safe and keep dollar-cost averaging into boring AF index funds let’s not forget that Amazon is #3 in the S&P 500 so you will reap any benefits that come with the stock split minus the volatility.
If anything you can show off to your husband and slyly mention the Amazon stock split at breakfast and I guarantee gets a side-eye of how the eff did you know about this / my wife just got slightly hotter for schooling me on stocks.
Until next week my Investing Queen!
Peace, love, and Big Yacht Vibes
Christy