{"id":10204,"date":"2022-07-13T18:07:49","date_gmt":"2022-07-13T23:07:49","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=10204"},"modified":"2022-07-13T18:07:50","modified_gmt":"2022-07-13T23:07:50","slug":"why-amazon-and-alphabet-stock-splits-could-pay-off-big-in-2023","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=10204","title":{"rendered":"Why Amazon and Alphabet Stock Splits Could Pay Off Big &#8212; in 2023"},"content":{"rendered":"\n<ul><li>Stock splits don&#8217;t help boost shares as much during market downturns.<\/li><li>Amazon and Alphabet could still benefit from their stock splits if there&#8217;s a big rebound next year.<\/li><li>The more important drivers for both stocks, though, are the companies&#8217; business prospects.<\/li><\/ul>\n\n\n\n<h2>Investors could experience delayed gratification with the stock splits of these tech giants.<\/h2>\n\n\n\n<p>Don&#8217;t buy when the price is too high. Buy when the price is lower. That&#8217;s what many buyers do. It&#8217;s why retailers frequently run special sales. And it&#8217;s also why publicly traded companies sometimes choose to split their stocks.<\/p>\n\n\n\n<p>The idea behind&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/stocks\/stock-split\/\">stock splits<\/a>&nbsp;is that smaller investors can&#8217;t afford to buy a stock when the share price is too high. But by chopping a single share into multiple shares, a company can make its share price much more affordable for those investors.<\/p>\n\n\n\n<p>Two of the biggest technology companies on the planet decided to conduct 20-for-1 stock splits this year for this very reason.&nbsp;<strong>Amazon.com<\/strong>&nbsp;<strong>(<a href=\"https:\/\/www.fool.com\/quote\/nasdaq\/amzn\/\">AMZN<\/a>&nbsp;1.08%)<\/strong>&nbsp;completed its stock split in June, while&nbsp;<strong>Alphabet<\/strong><strong>(<a href=\"https:\/\/www.fool.com\/quote\/nasdaq\/goog\/\">GOOG<\/a>&nbsp;-2.32%)<\/strong>&nbsp;<strong>(<a href=\"https:\/\/www.fool.com\/quote\/nasdaq\/googl\/\">GOOGL<\/a>&nbsp;-2.34%)<\/strong>&nbsp;will split its stock on July 15.&nbsp;Here&#8217;s why the Amazon and Alphabet stock splits could pay off big &#8212; in 2023.<\/p>\n\n\n\n<h2>Stock-split letdowns<\/h2>\n\n\n\n<p>Earlier this year, Amazon&#8217;s share price was well above $2,000. Many retail investors couldn&#8217;t afford to even buy one share at that nosebleed level. You might think that the company&#8217;s stock split, which brought its share price down to a little over $100, would have spurred a massive buying spree that sent the stock soaring. But it didn&#8217;t.<\/p>\n\n\n\n<p>The reality is that Amazon stock actually fell after the stock split last month. Shares of the e-commerce and cloud leader remain lower than they were before the split.<\/p>\n\n\n\n<p>Does that mean Alphabet will experience a similar stock-split letdown? Not necessarily. The dynamics in play when Alphabet conducts its stock split later this week aren&#8217;t exactly the same as those in effect when Amazon split its stock.<\/p>\n\n\n\n<p>However,&nbsp;<a href=\"https:\/\/www.fool.com\/investing\/2022\/06\/24\/will-alphabet-soar-after-its-stock-split-heres-wha\/\">Alphabet&#8217;s limited stock-split history<\/a>&nbsp;shows that investors shouldn&#8217;t count on a huge gain after its upcoming stock split. The last time the company conducted a stock split (in March 2014), its share price didn&#8217;t move very much.<\/p>\n\n\n\n<h2>A delayed effect?<\/h2>\n\n\n\n<p>I think there&#8217;s one primary reason why Amazon&#8217;s stock split wasn&#8217;t a rousing success and why Alphabet&#8217;s probably won&#8217;t be either. Blame it on the timing. Retail investors simply aren&#8217;t likely to rush into any stock when the overall stock market is down in the dumps. Amazon and Alphabet stocks have been hit even harder than the broader market.<\/p>\n\n\n\n<p>However, that doesn&#8217;t mean that Amazon&#8217;s and Alphabet&#8217;s stock splits don&#8217;t matter at all. My hunch is that they will &#8212; but with a delayed effect.<\/p>\n\n\n\n<p>Many economists believe the U.S. economy will enter a recession in 2023 if not sooner. A recent analysis by Federal Reserve economist Michael Kiley indicates more than a 50% chance of recession by the middle of next year based on a macroeconomic indicators model.&nbsp;<\/p>\n\n\n\n<p>Stocks typically sink during the initial part of a recession. However, they often begin to rebound well before the recession ends. The average length of a recession since World War II is around 11 months. If the U.S. economy enters a recession before mid-2023, it&#8217;s quite possible that Amazon and Alphabet stocks could start a major comeback by late next year.<\/p>\n\n\n\n<p>When retail investors return to buying stocks en masse, they&#8217;ll be much more likely to buy Amazon and Alphabet at share prices below $200 than they would with prices above $2,000. The stock splits of this year just might pay off big, but later than many investors might expect.<\/p>\n\n\n\n<h2>What will matter more<\/h2>\n\n\n\n<p>It&#8217;s important to understand, though, that Amazon&#8217;s and Alphabet&#8217;s stock splits won&#8217;t be the major factor in any future resurgence. Investors wouldn&#8217;t buy the stocks at any price if they didn&#8217;t believe in the companies&#8217; long-term prospects.<\/p>\n\n\n\n<p>That&#8217;s why Amazon&#8217;s and Alphabet&#8217;s business fundamentals matter more than their stock splits do. The good news is that both businesses remain strong.&nbsp;<\/p>\n\n\n\n<p>Amazon has plenty of room for growth in its e-commerce and cloud hosting markets. The company continues to expand into new areas as well, including helping brick-and-mortar retailers with its &#8220;Just Walk Out&#8221; no-checkout technology and building a telehealth service.<\/p>\n\n\n\n<p>Likewise, Alphabet&#8217;s Google services still dominate online advertising. Its Google Cloud unit is picking up momentum. The company&#8217;s initiatives in self-driving car technology and artificial intelligence could be huge winners in the coming years.<\/p>\n\n\n\n<p>Both Amazon and Alphabet have formidable moats and optionality for future growth. My prediction is that these two stocks will deliver market-beating returns over the long term.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stock splits don&#8217;t help boost shares as much during market downturns. Amazon and Alphabet could still benefit from their stock<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[254,3421,3422],"tags":[1102,6,3489,3558,888,3425],"_links":{"self":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10204"}],"collection":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10204"}],"version-history":[{"count":1,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10204\/revisions"}],"predecessor-version":[{"id":10205,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10204\/revisions\/10205"}],"wp:attachment":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10204"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}