By | June 7, 2022

After the split, two analysts are still bullish on Amazon stock.

Amazon Stock went public on Monday

What happened?

Shares of Amazon (AMZN 1.99%), the internet retail giant, saw a boost on their first trading day after the stock split. They rose 2.4% to 3.00 p.m. ET.

Wall Street can be credited with your success.

What are you waiting for?

After Amazon made the bizarre decision to divide its stock stock 20 for 1 in march, and that split finally taking effect today, investors were anxious to see how Wall Street would react and what price targets analysts would give the stock at the new price.

Street Insider reports that MKM Partners was the first to publish a report on Amazon (and a target pricing) post-split. MKM remains close to its presplit target price at $3,625 per Share (now divided by twenty). MKM values Amazon shares at $180 each, which is a little less than where it valued the stock before the split. This seems to be because MKM believes investors may have bought the stock after the split to make a profit. That catalyst is gone now that the stock split took place.

The Fly reports that Stifel, an investment banker, set a $190 price target for Amazon shares. This effectively keeps the banker’s presplit valuation at $3,800.

 

What now?

MKM, Stifel (and myself) both agree that the stock splitting is basically a non-event and doesn’t affect the company’s value in any way. In pastry terms, a stock split doesn’t alter the corporate pie’s size, but it does affect how many pieces it is cut into.

This is the good news. That’s the good news. This gives Amazon stock a PE ratio around 2 — twice the value investors normally consider a “fair market price”.

Or, put another way: Amazon stock is still too expensive no matter how you slice it.

Amazon Stock went public on Monday

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