Investors speculate on a stock split at the Internet giant Amazon. Such a corporate action could have significant consequences for the price of the Amazon share.
• Amazon shares in the spotlight of investors
• Investors speculate on a possible stock split
• Admission to the Dow Jones in sight?
Investors are eagerly awaiting Thursday evening when Amazon will present its quarterly balance sheet for the first time under new boss Andy Jassy. Investors are not only hoping for good business development, but are also speculating on the announcement of a corporate action.
Amazon stock: will a stock split be announced?
Investors hope that Amazon will not only present quarterly figures after the market closes, but that the balance sheet could be flanked by the announcement of a stock split.
Such a corporate action would make the Amazon share, which currently costs 3,695.73 US dollars, at least visually cheaper and could bring numerous new shareholders to the company in this way. In the past, various stock market stars had successfully implemented such a capital measure – for example, Tesla had carried out a stock split on its shares after a month-long rally , and Apple had also taken such a path .
Only three stocks are more expensive than Amazon
The speculation is also fueled by the fact that the US corporation’s share is one of the most expensive on the market. By far the most expensive stock is Berkshire Hathaway’s A-share , followed by NVR Inc. and Seaboard . The market capitalisation of Amazon is more than twice as high as that of the three higher-priced stocks combined.
Which would also speak in favor of a stock split: a few weeks ago the management of the company changed. Jeff Bezos has passed the baton to the new CEO Andy Jassy, who could establish himself as the new boss with the announcement of a corporate action and break away from founder Bezos.
Stock split would pave the way for the Dow Jones
If Amazon were actually to announce a stock split in the context of the balance sheet presentation, the company would probably address new buyer groups for whom the current share price is simply too high. In addition, such a measure would initially have hardly any consequences for existing shareholders.
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Indirectly, however, such a step would possibly secure the company inclusion in the US traditional index Dow Jones Industrial . Since the index is price-weighted, Amazon stock is unlikely to admit at its current level as the company would dominate the index. Fluctuations in the Amazon share would then have too great consequences for the development of the Dow Jones index. A share split and the associated lower share price would minimize this risk. At the same time, shareholders could hope for higher prices, because inclusion in the Dow Jones would force ETF providers, for example, to stock up on Amazon shares in order to correctly map the index.
This post is the first published on citytelegraph.com