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When there’s a major news item concerning e-commerce giant Amazon (NASDAQ:AMZN), financial traders pay attention. Something is happening that will make AMZN stock more accessible to investors with small accounts, and that’s bullish for the stock.
Yet, well-rounded investors shouldn’t only obsess over one event, even if it involves a gigantic company like Amazon. As we’ll see, there are multiple reasons to consider buying or holding Amazon shares today.
E-commerce is here to stay and Amazon is the undisputed heavyweight champion of this market segment. So, let’s find out what all of the buzz is about and how investors could potentially position themselves for profits.
What’s Happening with AMZN Stock?
Maybe you’ve wanted to invest in Amazon, but a price tag of $2,000 or $3,000 per share was outside of your budget. Granted, some brokers offer fractional shares, but this isn’t available to everyone and some investors might not be interested in owning fractional shares.
Now, Amazon has done something that many investors had hoped the company would do. As InvestorPlace contributor Samuel O’Brient put it, Amazon is kicking off the “summer of stock splits.”
To be more specific, Amazon is enacting a 20-for-1 stock split on Jun. 6. Hence, by the time you read this, AMZN stock might suddenly be a whole lot cheaper. Really, though, the value of the shares won’t change.
InvestorPlace contributor Stavros Georgiadis did a great job of explaining how a a 20-for-1 stock split works: “Imagine someone is giving you $2,000 in $1 bills. You exchange this amount for $100 bills and you get 20 of those bills. The total amount you have in both cases is the same.” I couldn’t have said it better myself.
Traders of all sizes will probably grab up the suddenly more affordable AMZN stock shares. Even if the stock won’t actually have more value due to the split, the lower price point will likely bring some folks into the trade.
A Fire Sale, Literally
Again, let’s not get so excited about the Amazon share split that we lose focus of the company we’re investing in. A totally separate news item is getting buried, but it’s worth paying attention to.
In particular, Amazon just introduced its next-generation Fire 7 and Fire 7 Kids tablets. Remember, Amazon is a tech-gadget innovator, as well as an e-commerce platform operator.
The Fire 7 starts at $59.99 and it features a 30% faster quad-core processor and “double the RAM.” Fire 7 users can also look forward to 40% more battery life for “up to 10 hours of browsing, watching videos, and more.”
Moreover, Fire 7 has a 7-inch touchscreen and front- and rear-facing cameras equipped for 720p/high-definition video recording. Meanwhile, Fire 7 Kids is available for pre-order starting at $109.99 and offers access to a broad range of popular, age-appropriate content.
What You Can Do Now
Let’s not lose sight of Amazon’s stature as both an e-commerce leader and a developer of superior-quality tablets at affordable prices. At the same time, it’s fine to be excited about the AMZN stock split. This event could cause legions of buyers to jump into the trade, which is bullish for the stock.
Or, you could simply invest in Amazon because it’s a gigantic, well-capitalized company. Investing in tech titans can be a sensible strategy for the long run. So, don’t hesitate to grab a few Amazon shares today — it should be easier now that they’re cheaper.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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