Amazon stock

Amazon unveiled a 20-for-1 stock split late on Wednesday, only weeks after megacap peer Alphabet did the same. Other companies that have split their shares ...

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Companies like to play with the price of their stocks sometimes…here's why and what you should know.

As a result, the price of the shares increases. The split took the price from US$ 4.50 per share to US$ 45 per share. But remember this with stock splits: Though the number of outstanding shares changes, and though the price of each share changes, the overall market capitalization of the company stays the same. All this said, for long term investors in a stock, a stock split (or reverse split) really doesn’t affect the fundamental value of the company or the wealth in your pocket,” points out Morningstar Canada’s Director of Investment Research Ian Tam. “We think the highlight was Amazon's plan to raise prices in the U.S. on Prime to $139 from $119, beginning on Feb. 18 for new members, underscoring Amazon's pricing power and highlighting Prime as a revenue driver. The company did this three times in the 1990s. There’s no harm done in this regard if the stock doesn’t split either. In most cases, stock splits are undertaken by companies when the share price has gone up significantly, particularly in relation to a company’s stock-market peers. In this example of a two-for-one split, if you had one share of Company X at $10 per share, you now have two shares of Company X at $5 per share. Liquidity means the ease with which investors can buy or sell shares on a stock exchange. The value of your holdings is the same, just in smaller chunks. This does not mean that the stock has become cheaper.