Amazon Stock Sharing: The price is set to fall, but it will not make it cheaper
That is about to change.
The split, which takes effect Monday, will be a 20-for-1 transaction, meaning that if you owned one share in Amazon, you would end up with 20 shares after the split, each costing about 1/20 of the previous one. the price. So the value of your investment does not change, and one Amazon share that was traded for just under $ 2450 would become 20 shares, each costing a little more than $ 1[ads1]20.
But here’s the thing: Even if a share split can do it seems as a stock is now cheaper, it does not actually make the stock cheaper when looking at valuation targets such as price-to-earnings or price-to-sell ratios.
Therefore, it is a “smart move” to make the stock prices of four-digit stocks more accessible, according to Michael Mullaney, director of global market research for Boston Partners. This should allow more investors to buy so-called round tickets (100 shares) from a company instead of just a handful of shares.
“Retail investor trading has increased dramatically over the past year and a half and has become very important again. It’s not just large institutions and hedge funds,” Mullaney said. “But it is impossible for an average investor to buy 100 shares of any of these shares at these prices.”
The prestigious group of 30 leading US companies is a price-weighted rather than a market-value-weighted index. So at their current stock prices, Amazon and Alphabet could not be added to the Dow without having an oversized impact on the daily movements of the index.
So the looming splits for Amazon and Alphabet could pave the way for these tech titans to join Apple and Microsoft, the only two companies in the US with higher market value than Amazon and Alphabet, in the Dow.
Is inflation finally at its peak?
Large technology stocks are not the only things with high prices. Consumers and businesses have struggled with rising prices for goods and services over the past year. Investors will get a new look at how high prices have risen when the US government publishes its latest consumer price index (CPI) on Friday.
Still, it may take some time for consumer prices to reach a level that is more comfortable for customers … and the Fed. The Fed ideally wants to see the CPI reduced to about 3% to 3.5%, if not lower, before declaring one victory against inflation.
“The good news is that inflation rates are starting to fall,” said Ken Shinoda, a portfolio manager at DoubleLine. “The question is will they come down enough?”
Next
Monday: Amazon action split. Apple’s worldwide developer conference begins.
Friday: Bank of Russia meeting on interest rates; US consumer price index; University of Michigan USA consumer mood
