Amazon continues to outperform other companies in its sector surging close to its all-time high. Analysts predict a stock split that could encourage participation from young investors, millennials, and GenZ traders.
E-commerce giant Amazon continues to rally on stock market indices while there are talks about a stock split. On Tuesday, Amazon.com Inc (NASDAQ: AMZN) stock surged 4.09% crossing $3300 levels and approaching its all-time high of $3344.
On Tuesday, the AMZN stock surged 130 points ending the day at $3312 levels. The Amazon stock has also surged nearly 75% year-to-date making it one of the strongest performers on Wall Street. The company has shown strong resistance to the COVID-19 economic slowdown. Rather, the pandemic turned out as a blessing-in-disguise for the e-commerce giant as online shoppers grew massively worldwide with governments initiating lockdowns.
Amazon has reported record earnings for the second quarter of 2020. The company’s total revenue for Q2 2020 stood at $88.9 billion. Besides, its net income surged 100% shooting to $5.2 billion year-over-year. Amazon is also aggressively expanding its fulfillment centers looking at massive consumer demand. However, due to the rising concerns of the Coronavirus spread, the company has to make some changes to its plans.
Amazon has postponed its two-day sales event – Prime Day – to sometime later this year. Apart from its e-commerce business, its other units continue to push the Amazon stock ahead. amazon’s cloud computing unit – Amazon Web Services – announced a 29% jump in revenue to $10.8 billion. The company has already provided its third-quarter revenue guidance between $87 to $93 billion.
On Tuesday, the AMZN stock outperformed other stocks like Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) from the tech space. Similarly, it also outperformed Walmart Inc (NYSE: WMT) from the retail space.
Will Amazon Consider Stock Split?
While surging a whopping 75% so far, the Amazon stock has already turned a bit expensive for many retail players to chip in. Some of the other top Wall Street performers like Apple and Tesla Inc (NASDAQ: TSLA) are already considering a stock split to push their per-share price lower.
Apple Inc (NASDAQ: AAPL) will complete its 4:1 AAPL stock split bringing its share price down from $460 to $115. Well, if Amazon adopts the same route, it will encourage further retail participation, said analysts. Daniel Betancourt, a moderator and writer with investing site OptionsSwing, told CNN:
“If more super expensive companies follow with splits, the stocks could rocket even higher. Logically, a stock split does nothing to change a company’s value. But there’s nothing logical about this market.”
He further added that companies would want to split their stock to encourage the participation of young investors, millennials and GenZ traders. Michael Kelly, global head of multi-asset with PineBridge, said:
“Retail investors, after a long hiatus, are gradually coming back to stocks. A stock split is custom made for individual investors. Institutional firms don’t really care about the share price.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.