3 Reasons to Buy Amazon Stock (After the Stock Split)


Year-to-date down 29% Nasdaq Composite index is in a bear market so now is a potentially good time to bet on quality companies trading cheaply. Fresh from its much-anticipated 20-for-1 stock split, Amazon (AMZN 1.78%) could fit the bill. Here are three reasons the e-commerce giant seems poised for long-term success.

1. Stocks are relatively cheap

A stock split occurs when a company divides its number of shares by a predetermined amount without changing its market capitalization (the value of all shares outstanding). While stock splits don’t affect fundamentals, they make stocks cheaper and more psychologically attractive to smaller investors. However, Amazon’s June 6 stock split comes at the end of a massive 35% year-to-date decline. As a result, the stock (in this case at least) is now relatively cheaper in both price and valuation.

$100 bill overlaid on a green stock chart moving up

Image source: Getty Images.

With a market cap of $1.2 trillion, Amazon is trading at just 2.4 times trailing 12-month sales.


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