Up 4% After the Stock Split, Is Amazon Stock Still a Buy?
On June 6, e-commerce giant Amazon (NASDAQ: AMZN) completed its 20-for-1 stock split, which brought its stock price down to $125 per share. Now trading for $130 a pop, the stock is up 4% since the split. But while the lower price may have led to a surge in short-term interest, Amazon's solid fundamentals could power continued growth over the long term. Let's explore some reasons why.
A stock split is when a company multiplies its share count to reduce its stock price without changing its market cap (the value of all shares outstanding). While this process doesn't affect valuation, it can make a stock more approachable for smaller investors. That said, Amazon's split comes at the tail end of a 23% year-to-date decline, making shares more attractive to investors shopping for a deal.
Like many Nasdaq companies, Amazon has faced downward pressure because of macroeconomic factors like inflation and rising interest rates, which tend to restrict the capital that investors have to risk in growth stocks. But the online retail giant has also faced company-specific challenges.
Source Fool.com
