Amazon stock split ‘makes change’ but could boost investment interest

Amazon’s stock price looks different today with the stock split taking effect. Amazon’s board of directors approved the 20-for-1 stock split announced in March at the 2022 annual meeting of shareholders on May 25. The split will likely allow more investors to afford to invest in Amazon and will likely expand the company’s audience and reach.

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The stock closed at $2,387 on June 3, started trading around $120 on June 6, and was up 0.7% in premarket trading.

According to Kiplinger, markets love splits because they offer investors more flexibility, while having no impact on a company’s fundamentals or valuation.

“That’s because a spin-off is essentially the same thing as making a switch. In this case, shareholders will effectively be exchanging one $20 bill for 20 $1 bills,” Kiplinger’s Dan Burrows reported.

Additionally, Barron’s reports that another possible boost for the stock is that the stock split makes the company a candidate for inclusion in the Dow Jones Industrial Average (DJIA), as the DJIA weights components in price function.

“A high-priced stock moves the index more than a low-priced stock, and a four-digit stock would exert an outsized influence on the index. But that change won’t happen quickly. The latest change to a Dow component dates back to 2020, when Amgen, Honeywell and Salesforce replaced Exxon Mobil, Pfizer and Raytheon,” Barron reported.

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Amazon is one of a slew of companies that have recently announced stock splits. Shopify announced one in April, and stock meme darling GameStop announced on March 31 that it would seek shareholder approval for a stock split at the upcoming 2022 annual meeting, according to a Securities filing. and Exchange Commission (SEC).

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Other companies made similar announcements, including Tesla in late March, and Amazon and Alphabet, which announced a 20-for-1 stock split in March and February, respectively.

This article originally appeared on GOBankingRates.com: Amazon stock split ‘making change’ but could spark investment interest

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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