Amazon enacted a 20-for-1 stock split on Monday, but does that make shares of the e-commerce giant a buy ?
The stock split dropped shares from a lofty $2,500 down to about $125 at the open on Monday, which is good for retail traders and especially people who want to trade options.
First, a stock split is ultimately just a marketing gimmick because it doesn’t change the valuation of Amazon. The company is worth about $1.2 trillion either way, but it does give retail traders an opportunity to get in at a more affordable price per share.
That opens the game up for a lot more people who simply couldn’t afford to get in before unless they were buying fractional shares, which you can’t do for options.
The stock was down about 40% this year… and then it bounced 20% in a little over a week after this announcement. So they’ll take money from wherever they can get it right now. Beggars can’t be chooser!
We discussed just last week how shocking and abnormal it was for Snapchat’s parent company to suddenly guide down for the rest of the year — out of the blue a month after reporting earnings.
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