by Anura Guruge
on June 3, 2022
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The most unusual feature is that the split price was 12% LOWER than the stock price the day the 20-to-1 split was announced. That is highly unusual. The price should have gone up.
As you can clearly see from the above graph the price did, indeed, initially go up. That was what was expected. Then it tanked.
Yes, of course, the tanking of the price was due to the interest rate hikes & the fear of inflation.
It was also interesting that there was no flurry of buying prior to the so-called (nominal) ex-split day, i.e., May 27, 2022. Folks finally appeared to have taken heed of my comments that there is NO ex-split day per se other than today, June 3, 2022 — the last day of trading.
Instead we saw the price go up Tuesday, Wednesday & Thursday of this week. That made sense & was par for the course. It was down 2.5% today, the last day, BUT there was two reasons for that: overall market conditions & folks taking profits knowing that they have a chance to buy the cheaper split stock on Monday.
So, the split did NOT help increase AMZN price — THOUGH we all know that AMZN price would be much lower IF NOT for the split. So, that is a relief.
I have been long AMZN for 10-years now! SMILE. Yep.
I doubt whether I will ever sell my AMZN holding! I option trade against my stock. As of Monday I will have 20 times MORE OPTIONS — quite literally! I am sanguine. I am cool. I keep on smiling. I am sure that this time next year AMZN will be around $180 IF not higher. Mark my word.
