The e-commerce behemoth Amazon (AMZN 1.67 percent) proposed a 20-for-1 stock split in March, and shareholders voted to approve it in May.
The separation has finally been official, but what has truly changed? There are now 20 Amazon shares for every one that existed earlier.
As a result, the value of each Amazon share has decreased. Prior to the split, one Amazon share was worth $2,447,
therefore reducing that value by 20 yields a new share price of $122.35. However, Amazon's market
capitalization has stayed constant at $1.2 trillion, making the stock split purely cosmetic.
Companies like Amazon use this to make their shares more accessible to smaller investors,
with the goal that some of these new purchases may expand their shareholder base.
But, essentially, the rationale for owning Amazon stock remains unchanged.