Risk, returns & timeframes illustration
1 min read
March 16, 2022
by

Amazon heads to Splitsville

Amazon’s splitting their stock 20-for-one, so does that make shareholders 20 times richer? 🤑 Nope, it’s not raining money, but perhaps it’s a psychological win for investors. 👛
1 min read
March 16, 2022
by

Amazon heads to Splitsville

Amazon’s splitting their stock 20-for-one, so does that make shareholders 20 times richer? 🤑 Nope, it’s not raining money, but perhaps it’s a psychological win for investors. 👛
1 min read
March 16, 2022
by

Amazon heads to Splitsville

Amazon’s splitting their stock 20-for-one, so does that make shareholders 20 times richer? 🤑 Nope, it’s not raining money, but perhaps it’s a psychological win for investors. 👛
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As far as splits go, they don’t come much bigger than Amazon’s (AMZN) freshly announced 20-for-one stock split. It’s at least the biggest split we’ve seen since Kim and Kanye, or at least since Alphabet’s share split last month. Does it mean Amazon shareholders just got 20x richer? No! Come on…that was a joke. Splitting one share into more pieces doesn’t change a company’s fundamental market value. A stock split increases the number of shares available to buy and reduces the sticker price investors pay, making it feel more affordable to buy shares. 🤑

Unlike a messy public divorce, share splits are relatively quick and painless. Amazon’s share split is expected to take place in June, when investors will receive 19 additional shares for every one share they own. Using Amazon’s current share price of around US$2,900 per share as an example, the cost of buying one share would drop to around US$145. As a Hatch investor, you can already buy as much or as little of a company (or ETF) as you like thanks to fractional investing - yep, even those class A shares of Warren Buffett’s Berkshire Hathaway (BRK.A), which trade hands for around a mere US$489,000 each! Amazon will also be splashing the cash, buying back US$10 billion of their own shares and putting some of its giant US$36 billion cash stash to use. 👛

Could more companies follow Amazon and Alphabet to Splitsville? Bank of America heavyweights reckon a number of companies with high share prices could also make eligible candidates to have on the radar, including home building company NVR (NVR) which has a share price of nearly US$4,800 per share, as well as car retailer AutoZone (AZO) and burrito chain, Chipotle (CMG), which both trade for more than US$1,000 per share. ¡Arriba! 🌮

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

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