The summer of stock splits is off to a good start. Last Friday, Amazon (NASDAQ:AMZN) enacted its 20-for-1 stock split.
Currently, AMZN stock trades at just under $125 per share. That’s a much lower price from where it closed before the split. In fact, this is Amazon’s lowest level in 25 years, although experts remain unworried. Each time shares of Amazon have split, they have come back stronger. Typically, stock splits are enacted to make shares of a given company more accessible for investors.
InvestorPlace contributor Chris Tyler says buying Amazon stock is “anything but a split decision” now. But Tyler isn’t the only voice calling this a buying opportunity. One expert in particular is quite bullish on shares.
AMZN Stock After the Split
David Wagner is a portfolio manager at investment advisor firm Aptus Capital Advisors. Wagner is also an AMZN shareholder in Aptus exchange-traded funds (ETFs). Following the split, Wagner shared his insights in an email to InvestorPlace:
“For arguably the first time in 20 years, Amazon has significant excess capacity, and we expect Retail margins to improve from recent lows as utilization scales. An uncertain consumer outlook adds risk, but with [e-commerce] at 15-20% penetration of Retail, y/y [e-commerce] growth trends likely bottoming, and the company seemingly cost focused from here, we see Amazon as well positioned for resumption of [e-commerce] penetration growth.”
That isn’t the only positive mark Wagner sees for AMZN stock, either. “[T]his stock tends to outperform well when its harvesting instead of investing,” the analyst adds. “And right now, it’s finally harvesting.”
Wagner does note that stock splits aren’t a guaranteed magic pill to maximize returns for investors. However, he says that “splits lately have been a source of relative alpha.” The analyst and his firm continue to regard AMZN stock with favor, although Aptus would be willing to “pare back” if the share price grew to exceed $150.
The Road Ahead for Amazon
Stock splits don’t instantly create value for a company. However, they can certainly prove beneficial to investors.
Back in 2020, Tesla (NASDAQ:TSLA) announced a stock split, sending shares up 80% between the announcement and actual split date. That type of success has compelled Amazon and other high-growth tech companies to split shares as well.
AMZN stock may indeed reach $150 down the line. For now, though, shares are at a great price for small-scale investors looking to buy into the tech behemoth.
On the date of publication, Samuel O’Brient did not hold (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.
