All You Need to Know About the Stock Split of Amazon, Tesla, and Alphabet
04 April 2022 - 7:10PM
Finscreener.org
Stock splits seem to be the trend
in financial markets these days. Giants like
Amazon (NASDAQ:
AMZN),
Tesla (NASDAQ: TSLA),
and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)
have announced stock splits.
Retail investors seem to prefer
them because they feel that they can buy shares of good companies
without burning a hole in their pockets.
While stock splits are only meant
to make the stocks much more accessible to retail investors, the
corporate action does not increase the overall market value of the
company. This is because market capitalizations are being
calculated by multiplying the share price by its total number of
shares and a stock split only increases the number of outstanding
shares.
However, stock splits by Amazon,
Tesla and Alphabet will increase the accessibility and liquidity of
these shares, leading to an uptick in prices. Tesla split its stock
in Q4 of 2020, after which it gained significant momentum to end
the year at all-time highs.
So, let us understand the
announcements made by these giants in detail:
- Amazon
The Seatle-based company has
announced last month that it is going to split its shares by a
factor of 20-to-1 following which there will be actually twenty
times more amazon shares in existence than it is today.
Astonishingly the company is actually undergoing this strategy for
the fourth time now, though this is the first time in this century.
Post this decision the company has gained close to 8% value in the
past month.
The split is expected to take
place on or around June 3, 2022, and for existing shareholders of
record by May 27, 2022, as per an SEC filing and the company will
start trading at its new split-adjusted price from Monday, June 6,
2022.
Retail investors will get the
most benefits from this move as post the application of this
decision Amazon shares will be available at one-twentieth of their
current per-share value. This means retail investors can buy one
Amazon share for as little as $163, at current prices. An
investment of $500 can get them at least three shares compared to a
scenario when $1,000 couldn’t get them even one share.
- Tesla
The
electric vehicle
manufacturer is
announcing its stock split for the second time in a two years
period. In August 2020 it had made a 5-for-1 forward split and
witnessed share prices gain 60% in the following three-week
period.
When TSLA split its stock in
2020, its share price was around $1,373 and itU+02019s currently
trading near $1,085. Moreover, the company has already added
more than $80 billion to its valuation post the stock split
signal.
Company CEO Elon Musk knows Tesla
is a favorite holding among retail investors even though more than
61% of outstanding shares are held by institutional investors and
insiders combined. So, to keep retail investors happy the company
might be encouraging its board to move towards another stock
split.
- Alphabet
In the month of February, the
tech giant announced it will be going for a 20-for-1 stock split
with which stockholders of record at the close of business on July
1, 2022, will be receiving additional 19 shares of stock for every
share they own on or about June 3 and the shares will start trading
at the split-adjusted basis from June 6.
Alphabet has already added close
to 4% in the past one month following this decision as the retail
investors are overjoyed that post its implementation, they will get
to purchase shares of one of the biggest companies in the world
just by paying $139.
Alphabet (NASDAQ:GOOG)
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