Amazon and Alphabet Have More in Common Than a Stock Split

It's not unusual for retail investors to get excited when companies announce stock splits since these have the effect of making their shares seem more affordable. Recently, Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) have each been capturing headlines because of their respective stock splits. Amazon's 20-for-1 stock split, which took effect on June 6, means its shares are now trading for one-twentieth of their pre-split value. Similarly, Alphabet announced a 20-for-1 split which will go into effect as of the end of trading on July 15. 

Amazon and Alphabet are dominant forces in the cloud and advertising industries, respectively. That fact, along with inexpensive valuations, offers a more compelling reason to invest in either or both of these companies than just their stock splits. 

Basically, nothing much. That's because a stock split does not change investors' ownership percentages. If you own 50 shares of a company that performs a 10-for-1 stock split, your 50 shares will turn into 500. But you'll still own the same total percentage of the company as you did before the split, and you'll still be entitled to the same proportion of its earnings.

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Source Fool.com