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Finance

Why Do Stocks Split and How Does It Benefit a Company?

An Amazon stock split would enable more investors to buy shares of the company since each share would be at a lower price. Currently, Amazon stock is trading at over $3,500 per share on the Nasdaq. If Amazon were to do a 10-for-1 split, the per-share price would be divided by 10 to approximately $350 apiece. 

In the Dow, stocks are weighted by price, not just market cap. If Amazon were to reduce its per-share price through a massive stock split, it would be within range of inclusion in the Dow. Dropping the stock price might draw more retail investors, who care more about the price than institutional investors do.   

Keith Lerner, the chief market strategist at Truist Advisory Services, said that being in the Dow is largely “symbolic” and demonstrates your leadership in the industry, according to Yahoo Finance

View more information: https://marketrealist.com/p/why-do-stocks-split/

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