Amazon 20-for-1 Share Split

When you get your Vestact mini-statement late this Friday night you will probably notice that the Amazon share price has dropped by over 90%. Fear not, the amount of shares you own is now 20 times more. The much anticipated Amazon stock split happened yesterday.

Technically, stock splits don't change anything. The Amazon share price is divided by 20 and the amount of shares in issue is multiplied by 20. The value of your Amazon holding does not change at all.

It does make a difference for retail investors because the shares become more affordable. Instead of needing $2 500 to buy 1 Amazon share, you now only need $125. That's certainly useful for Vestact clients. One Amazon share used to cost R40 000.

Shares with lower nominal prices are also more liquid. The anticipation of that extra liquidity does sometimes push the share price higher before a split. Amazon has popped by 20% in the last 2 weeks. Let's hope that momentum continues.