Stock Splits Explained in 2022 for Amazon and Tesla

How does a stock split work? Detailed walkthrough using Amazon's 2022 stock split plans.
PLUS: Why are stock splits so rare now, and do they truly offer you a way to earn abnormal returns? Or are they just more likely to happen for companies who have grown faster in the past?
00:00 Intro
01:12 Amazon's 20:1 Stock Split
02:08 What is a Stock Split?
04:17 What happens if you buy after the Record date?
05:48 Why do companies split their shares?
09:04 Why are stock splits so rare these days?
10:47 Do stock splits cause a company to be more valuable?
12:25 Can you trade a stock split successfully?
#amazon #tesla #stocksplit
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[@amitava1973]

Remembering my MBA school days of Corporate Finance and Investments Analysis 😀. Kudos to you for explaining the subject in a lucid manner.

[@ladyjatheist2763]

THANK YOU! I pasted my question about exactly what you were talking about... THANK YOU for being so comprehensive! Definitely subbing!

[@guanacoyyz9646]

Hi Preet, im happy that I found your channel! Love your video and the charisma at explaining things! Thanks again!

[@PreetBanerjee]

Thank you very much! I appreciate that!

[@skrmacs4815]

thanks Preet. Valuable information as always.

[@lovinag963]

Thanks so much for explaining this to us .

[@MarcosMatsumotofx]

The best video about the topic👏🏻

[@miked104]

Preet dogg, I am enjoying the frequent uploads and I am learning. Thanks player.

[@PreetBanerjee]

Thank you, sir!

[@MikeyBadabingBadaboom]

Preet, this video you made is worth its weight in gold. You're good, brother.

[@PreetBanerjee]

Thank you sir!

[@dougackerman4182]

Excellent video

[@Soumenmsd]

Explained well. Khub valo. Bahut accha bola apne....

[@justinjones8706]

Wanted to get in on this and will be able to next week when the market opens Tuesday but was worried since I missed the 27th date I wouldn't get that share split.

[@sl523]

Another important info is that stock split makes it more palatable for the average folks to do options trading. Since 1 option consists of 100 shares, AMZN at stock split price is more palatable for options trading than before.

[@zw3565]

not many people can buy 100 shares at $3,000 but a lot of people can buy 100 shares at $150.

[@obrienortega6942]

I’m glad Amazon is doing a stock split. Now I get a chance of owning a piece of the company. I could careless about options trading. I’m in for the long run. Amazon is a very powerful company and they’re basically at war with these other companies (FedEx, UPS, etc)

[@mijuajua4820]

Same!🙌🏻

[@Tohaveaname]

You can buy the stock as a fraction anyways so you don't have to buy whole stocks

[@christianmbabazi9722]

@@Tohaveaname true

[@barrylunch]

Great explanation as always. However, I was hoping you were going to elaborate on the Tesla plan that you mentioned off the top: what’s the motivation for a stock dividend instead of a cash dividend? (And I suppose the reason for the split is to increase the number of shares already held by the company itself for such a purpose?)

[@PreetBanerjee]

The announcement came after I had filmed the video so I added in the voiceover right before publishing. My gut reaction is that this is performative (and probably a savvy move). It’s dilutive to the stock but has generated more hype for Tesla so it may very well take a lofty valuation even higher. Psychologically, it’s nice to receive dividends (cash or stock), but this doesn’t really cost Tesla anything. It’s like a fractional forward split 😊

[@dannny9059]

@@PreetBanerjee I’d imagine it has a lot to do with making it more accessible for employees to buy stock back at a lower cost bi yearly. Probably also to get some retail involved, but I’d guess mostly for employee purchase program.

[@aarongold7220]

Great video. Should do one on the myth of stock splits being profitable for shareholders. It's not really a common opinion on the internet on any investment channels, but I find it's ridiculously pervasive at work.

[@bigredog100]

Stock splits are great and for sure profitable! Literally got into stocks in 2020 with my stimulus which was only around 1,400, and I I have seen 9x growth since then. In case you're wondering, I had gotten on Tesla.

[@atray3288]

I absolutely disagreed. I’ve purchased blue chip and some small cap splits for years and over 5 years have done very well. Buy before split

[@PreetBanerjee]

And when you calculate your risk adjusted returns agains a multi-factor framework that incorporates more than the market factor, what was your analysis of excess return?

[@miamiskolczy7472]

I have plenty of Amazon - I purchased slowly….the fact that we can buy partial Shares opens doors to new investors.

[@stormtrooper3381]

I doubt AMZN will advance based on a stock split. Split allows employees to sell partial is the only advantage

[@susanr3108]

So how long will it take to get back up to original price?

[@mijuajua4820]

I’ll take my chances and try to be 1 share of amazon stock and hold for at least 10-15 years. ✌🏻Thank you for the wonderful video!

[@JimmD.]

BuY GME r/superstonk

[@33ladyRAM]

I made out like a bandit with AMZN and continue to hold almost 10 years now

[@bederhajali]

You should do voice over or audio books. God bless you have a very clear voice. Good job

[@PreetBanerjee]

Thank you!

[@ContentCaptures]

I hold 220 in tesla stock Can you tell me will a stock split increase these shares? And by how much I’m lil confused (new to investing)

[@davidriley3570]

Yes, depending on how it will split, maybe 5:1 or 6:1 , your shares will increase by 1,100 or 1,320 shares. Not sure what the split will be though brother.

[@lovinag963]

@Preet. Q. I want to know what would u recommend to me for buying Amazon Stock Split, should I buy after the stock split n the share price is much lower for me buy to Profit or do I buy before the split within the June 3 Friday to Monday???

[@PreetBanerjee]

Hi Lovina, I'm sorry but I'm not allowed to provide tailored advice on securities to individuals. However, food for thought on that question is provided in the video in a general nature.

[@CaseyKCRichards]

@@PreetBanerjee you could give your opinion .. come on

[@PreetBanerjee]

@@CaseyKCRichards My opinion is that only one of us has read any securities regulations.

[@CaseyKCRichards]

@@PreetBanerjee I bet if he was paying you .. you’d jump . Click bait

[@tifealli9146]

can i buy amazon stocks exactly on june 3rd cause

[@ravencroftgraphics3d]

BUT... what about those fractional scares i.e. 10% or 15% fraction of a share. how does the split work with this? also, more info for the tesla split would be nice...

[@PreetBanerjee]

Yes: if you own 0.1 shares, you’ll end up with 2 shares in a 20-for-1 forward split. I don’t see the details of Tesla’s split yet.

[@jayevans6077]

Does anyone know that if you own a fraction of Amazon stock, that you'll get the multiple shares? Obviously you won't get the full 19 shares if you own the full share of Amazon stock. But do you get like some or a half depending on what you own?

[@PreetBanerjee]

Yes you’ll end up with 20x what you have. So if you have 0.1 shares, you’ll end up with 2 shares.

[@cdcVintage]

How do you feel about Amazon tanking. Can it recover with the upcoming buy back and stock split in June?

[@PreetBanerjee]

Personally, I'm an indexer. I don't generally care about individual companies' performance, nor do I believe that I can predict short-term movements. There are just too many variables to consider.

[@michael-es2xn]

For example if you had like half a share of amazon do you still get the split but just calculated lower since you didn't buy the full share?

[@PreetBanerjee]

Yes, you end up with 20x. So if x = 0.5, you end up with 10 shares.

[@brideofchrist3973]

I got 10 shares because I had almost 0.5 of the share

[@bentley5589]

First time watching wonderful video. Question when is the time to buy in on Amazon's 2022 stock split? May 27th June 3rd or June 6th?

[@kalatitati8795]

Whenever you have money imo

[@bentley5589]

@@kalatitati8795 You asked me. Whenever you have money imo. Where I have money ? None of your business.

[@AndyIvan74]

So what happens to all of the share price charts? Do they just update all of the previous data to the split ratio?

[@PreetBanerjee]

Yes. The charts will be “split adjusted” so you see all previous data based on the new number of shares and so the changes in market cap back to inception will still make sense and portray the growth path the company took in an easier to digest way.

[@lasombra120680]

Preet. Looking at the split and thinking of getting involved in both on a small scale. June 6th should be a little wild. my logic brain tells me that Amazon is the much safer bet. yet the rapscallion in me says Tesla.

[@valuespeaks6766]

Hey Preet! Great video - just posted a video on my channel about the Big 3 stock splits coming up! Definitely agree that these are solid opportunities and can't wait to see what comes from it.

[@papa-dt1cv]

Hi Q:Any idea why so many doing stocksplit these bearish days? What are risks and cons? Are these companies already have more businesses and short of cash?

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 🔝 he’s 📧 it's quite complex as a beginner and you ought to understand the market trends and different algorithm. The losses i incurred made me believe trading was actually a dead end not until I made 10 times on my trading capital in 3 weeks and with the market making large moves and the support and mentoring I got from Mr Kurt and he made me learn to read and understand the language of price action rather than relying on lagging indicators..🔝🔝

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 he’s 📧

[@rohanlal6266]

Will Amazon fractional shares also split or is it only whole shares ?.

[@PreetBanerjee]

Fractional shares will also split at the same ratio, yes.

[@erickmendez6829]

Would you buy before the split or after? Thank you!

[@PreetBanerjee]

Hi Erick, towards the end of the video you’ll find some info to help you in making that decision. I went over some academic research and discussed the results of trying to trade after a split announcement. It suggests that on average there is no better risk adjusted return performance.

[@ksinha9210]

Ok I am confused! After the split are you buying one share for $120 or 1/20th of a share for $120 ?

[@PreetBanerjee]

One share for $120 and there are 20 times as many shares now as before the split.

[@MrAcruz2]

Do you have Videos for new investors? With apps recommendations etc.

[@o.c.g.m9426]

Ryan Scribner is very good for newbies

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 🔝 he’s 📧 it's quite complex as a beginner and you ought to understand the market trends and different algorithm. The losses i incurred made me believe trading was actually a dead end not until I made 10 times on my trading capital in 3 weeks and with the market making large moves and the support and mentoring I got from Mr Kurt and he made me learn to read and understand the language of price action rather than relying on lagging indicators..🔝🔝

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 he’s 📧 tell him that janice clint recommended you to him okay

[@michaelhe9399]

How about when u have a fractional stock will u get shares

[@PreetBanerjee]

Yes, you end up with 20x. So if x = 0.1, you end up with 2 shares.

[@littleninjai222]

You deserve a well aged Scotch for this! Thanks for another very well explained educational video.

[@PreetBanerjee]

You’ve inspired me to have a dram tonight!

[@littleninjai222]

@@PreetBanerjee Love it! Miss your podcast but appreciate that you do these videos for us. You really have an exceptional way of explaining complicated financial information. It's greatly appreciated!

[@MskashmirB]

I’d like scotch too

[@stanshelnutt6906]

20:1 split 20 quarters for a $5.00 bill

[@ladyjatheist2763]

I don't know if anyone can answer this but: motley fool explains that anyone who HAS amz stock in their portfolio as of 5-27 will get the split. I put the order in for 1 share, ON the 27th... so, the questions are: does that count and will result in me getting the split, or will I be buying 1 share for that exorbitant price and not get the split? and if the latter is the case... isn't it just better to pull the order and wait until the split when more shares will be affordable for around the same amount of money? Anyone with prior experience that can help me please?

[@bigredog100]

You are good! Amazon will split on the 6th! Anyone that buys before the 6th will get it!

[@alexeipolozov]

@@bigredog100 That's not true, I didn't...

[@RightAsAlways5759]

Google will split this summer as well

[@jasonluke4275]

What If i buy half a share? Will I get +9.5 shares?

[@PreetBanerjee]

Yes

[@chucknorris9511]

I am buying as much as I can before it hits $200

[@DH-pz7bc]

After the split all the short sellers will swoop in to beat the price to death. I’ll wait to buy after the dust settles.

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 🔝 he’s 📧 it's quite complex as a beginner and you ought to understand the market trends and different algorithm. The losses i incurred made me believe trading was actually a dead end not until I made 10 times on my trading capital in 3 weeks and with the market making large moves and the support and mentoring I got from Mr Kurt and he made me learn to read and understand the language of price action rather than relying on lagging indicators..🔝🔝

[@janiceclintstevenkurt32gma65]

Behind my name 🔝 he’s 📧 tell him that Janice clint recommend you to him okay

[@o.c.g.m9426]

That $164 is now $123 🤣🤣..or $2460. Fed tightening that belt. Amazon is so big it can't help but be affected

[@imdrrich]

Probably nothing? Don't you think that after the Amazon split, say, in a year or two, the price might be $300 to $500 per share?

[@PreetBanerjee]

I don’t know, it could fall, too. But a spilt in and of itself doesn’t seem to be a better signal than the fundamentals driving long term growth and share price, thereby putting a company in the position to consider a split.

[@PreetBanerjee]

In other words, it may very well be much higher priced in a year, but it would not likely have been due to the split. Just as a fall in price would not be due to the split either.

[@imdrrich]

@@PreetBanerjee Thank you, Preet. Extremely informative!

[@PreetBanerjee]

@@imdrrich You’re welcome! Thanks for watching and commenting.

[@raul2502]

Im with you on this one. At a much lower price such big company proven to be so strong so far could attract many new traders. However there is always risks

[@raul2502]

Im not so sure about the do nothing interpretation. I think Amazon is been proven to be solid for years now. However there is always risks. In the long run i think is worth it mainly at a lower price it just might attract many more buyers. Just my opinion. Could go the other way around but i doubt it.

[@PreetBanerjee]

If you think it is underpriced then it makes sense to want to buy it. But an appraisal of intrinsic value should likely be separate from the split. Whether you want to buy based on a split announcement is your call but hopefully the info in the video added some food for thought. Thanks for watching and commenting!

[@daddysboyslawncare]

I was concerned about the do nothing comment too. I'm new to all this. What is the likelihood that once the split happens the shares will go back to 3200 or higher.

[@PreetBanerjee]

@@daddysboyslawncare It’s your money, so you can of course feel free to try and play the stock based on the psychological effect of a split and a lowered price per share if you desire, but evidence suggests that, on average, investors don’t get better risk-adjusted returns for doing so. Because it’s an average, sometimes investors will get better returns and sometimes they’ll get lower returns. If it works out, the tendency is to think you can outsmart millions of professionals all the time. It leads to more active trading which has been shown to lead to lower returns. It’s easy to find other people who will tell you what you want to hear though. Whatever you decide, I wish you good fortunes!

[@nelliemillan4627]

If I only have 10 shares . With a split I will have 200 ! If that is not a gain I don't know what is .& if there is no split. I still have my 10 for the looong .

[@chrisgoosebrooks638]

What if I only have $1000 worth of Amazon?

[@PreetBanerjee]

If you own a fraction of a share, the same logic applies: you’ll end up with 20 times as many shares as you have now. So if you own 0.3 of a share, you’ll end up with 6 shares after the split.

[@gamaslens8485]

@@PreetBanerjee great video man! So they give you additional shares? Sounds like it’s better to hop in now. I’m a new investor so I like to keep up with the content

[@PreetBanerjee]

@@gamaslens8485 Thanks, but let me clarify: you'll get more shares, but each share will be worth less. Your proportional ownership will not change as a result of the split. I wouldn't buy expecting to get free additional shares that increases your proportional ownership of the company.

[@gamaslens8485]

@@PreetBanerjee so no benefit on it then? Aight. Thanks! I just needed to know. I was gonna invest haha. Keep it up man!

[@genxiong2695]

@@PreetBanerjee Thanks for explaining. Seems like a lot of folks here skip math and went straight to recess.

[@0013619511]

The market is slowly going down, one step forward, two steps back.

[@kokwahtan8577]

After split . It will go down further.

[@notapplicable3450]

I wish I had the Coca Cola stock when they did a stock split

[@alexeipolozov]

I've bought on June 2 and din't get my shares.

[@PreetBanerjee]

5:14

[@alexeipolozov]

@@PreetBanerjee Today is the distribution date, no ?

[@PreetBanerjee]

@@alexeipolozov Yes, but you may have to wait a day or two for the due bills to settle since you bought after the record date.

[@PreetBanerjee]

Keep me posted if you don't get your shares by Wednesday. Curious to see how long it is taking for people.

[@alexeipolozov]

@@PreetBanerjee That could never happen because, I guess I was not a shareholder on May 27th. Did it happen before that people were bag holding pre-split shares ?

[@davidbell9130]

suprised u didnt mention alphabet split

[@RawLu.]

Americanization 24/7/365...