If you are an average investor, a cheaper stock price for Amazon (AMZN) could be just the moment you need to get into a growth company with major potential catalysts, analysts say.
This week Amazon revealed a 20-for-1 stock split announcement. The company also uncorked a massive $10 billion stock buyback plan.
Amazon’s stock split is the fourth one in its history. The last split came in September 1999.
If shareholders approve of the split, it will begin trading on the new basis on June 6.
“The stock split is important. It increases the accessibility to a broader array of investors and it does allow for inclusion in the Dow Jones Industrial Average (^DJI). Academically, does it change the stock price? No, but it makes it more accessible and if you are included in the Dow index-based funds will have to own you. That creates demand for shares,” said Wells Fargo tech analyst Brian Fitzgerald on Yahoo Finance Live.
Shares of the e-commerce giant gained 5% on Thursday as traders cheered Amazon’s stock split and new buyback. The stock tacked on another 1% in Friday’s session.
The stock has been among the top trending tickers on the Yahoo Finance platform the past 24-hours.
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Fitzgerald adds investors shouldn’t overlook Amazon’s buyback announcement either as it sends important clues on future profits.
“We think that the buyback is just further evidence of a sharper focus on profitability. Amazon undertook a significant investment cycle over the last two years to support the rapid expansion that happened during COVID. We believe that the investment intensity is downshifting to a more single digit basis,” Fitzgerald said.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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