Don't panic when you see the first trade in Amazon.com shares on Monday.
Back in March, Amazon announced a 20-for-1 stock split, which is now being implemented. With the start of the new trading week, each Amazon share becomes 20 shares. The stock, which on Friday dropped 2.5% to $2,447, should open Monday with a price of about $122. Amazon's share count will jump from 509 million to 10.2 billion.
To be clear, this isn't a case of getting something for nothing. It's comparable to exchanging a $20 bill for 20 singles.
But the split could provide some benefit to the stock. For one thing, it makes the shares more accessible to small investors. Also, as Barron's has noted before , the split opens the door to potential inclusion of Amazon shares in the Dow Jones Industrial Average. Adding high-price shares to the Dow is problematic because the index is weighted according to price, so the same percentage change in a high-price stock moves the index more than for a low-price one.
This is the fourth time Amazon has declared a stock split since it went public in 1997, but the first in more than two decades. The other three splits were all within 15 months in the heart of the internet bubble period: 2-for-1 in June 1998, 3-for-1 in January 1999, and 2-for-1 in September 1999.
Google's parent, Alphabet has declared a 20-for-1 split as well, That one takes effect in mid-July. Tesla $(TSLA)$ and GameStop $(GME)$ have indicated plans for splits, but have provided no detail on the ratios or timing. Apple $(AAPL)$ completed a 4-for-1 split in 2020.