AMZN

Amazon.com, Inc.

109.56
USD
3.15%
109.56
USD
3.15%
101.26 188.65
52 weeks
52 weeks

Mkt Cap 55.49B

Shares Out 506.44M

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Amazon Shareholders Approve 20-for-1 Stock Split. Here's What Investors Should Know.

Amazon's (NASDAQ: AMZN) much-anticipated stock split will take place on June 3. Shareholders approved the 20-for-1 stock split at the company's annual meeting on May 25. If you're wondering how Amazon's stock split will impact your portfolio, below is a crash course on how stock splits work. Behind the scenes of Amazon's upcoming stock split Stock splits have been taking over headlines in 2022. In March, Amazon joined the tech gang by announcing that its 20-for-1 stock split was approved by the board of directors. The stock shot up after the news, but shares of the tech behemoth tumbled to their 52-week low a few days before the company's 2022 annual shareholders' meeting. Amazon's stock has experienced a few bumps and bruises, but it won't impact the stock split. Shareholders gave Amazon the green light to move forward with a stock split at the annual shareholder meeting. All shareholders on record as of May 27 will see 19 additional shares of stock for every one share they own on the big day. If you have two whole shares of Amazon stock in your account by the deadline, you'll receive 38 additional shares after the stock split. The stock split will take place on June 3, and the price per share will reflect the split on June 6. This will make it easier for smaller investors to buy shares of Amazon at an affordable price. Stock splits won't make you rich overnight Although stock splits tend to stir up excitement among investors, it's not as glamorous as it sounds. A stock split in itself won't make you rich overnight. It's more of a cosmetic transformation. Every share of stock will be divided into smaller pieces. This gives more people a chance to own whole shares of the stock at a cheaper price. You can think of a stock split like exchanging a $20 bill for 20 singles. Although you have more dollars in your hand, the value of the money in your possession is still the same. The stock split will allow investors to buy whole shares of Amazon at a cheaper price. After Amazon's stock split, the four-figure stock price will drop to $115 if the stock is trading at $2,300 before the stock split. The future of Amazon's share price It isn't uncommon for a company's stock price to explode after a stock split. However, you can't guarantee that Amazon's stock price will shoot up after the split. The best move you can make is to invest in companies based on the underlying business. Go behind the scenes and evaluate the business by asking the following questions: Is the company's revenue sustainable? What factors are driving revenue? Are there any threats or weaknesses that can interfere with future growth? By answering these questions, you'll be forced to do your research and determine if the company is a good fit for your goals and risk tolerance. A stock split may be a motivator to jump in, but it won't be enough to drive the performance of a company over the long term. Selling Amazon stock after the split If you decide you don't want to hang on to your extra shares after the stock split, you might have to pay taxes. It depends on how long you've held the stock and your taxable income for the year. For example, if you bought shares of Amazon after the stock split announcement and sold your extra shares after the stock split, you'll be on the hook for short-term capital gain taxes. This is what happens when you sell stock that you've held for a year or less. However, if you don't touch your extra shares of stock in your account, you don't have to worry about taxes. A stock split is not considered a taxable event for investors. Don't get fooled by stock splits This year's stock split hype may tempt you to load up on shares of company stock that weren't even on your radar. A stock split in itself shouldn't be the main reason you buy a stock. You may see a temporary boost in the stock price after the split announcement, but it's not enough to keep investors calm in this volatile market. That's not to say you can't get excited when a stock split is coming up. If you see long-term value in a company, there's no shame in celebrating your extra shares received from a stock split. It may be the boost you need to reach your share count goal and execute other strategies in your account that can take you to the next level on your investing journey. 10 stocks we like better than Amazon When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of April 27, 2022 John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Charlene Rhinehart, CPA has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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