June 2, 2022
Dear Client,
Please be advised of the upcoming AMAZON.COM INC (AMAZON) stock split that is going to take place as per the following schedule:
Ex-Date: June 6th, 2022. Common shares will trade at the new split-adjusted price.
Important implications of the AMAZON Stock Split:
1. The quantity of shares of each client’s position will multiply by 20.
2. Post-split, the “open price” and “take profit / stop loss” of each position will be adjusted, which will be the original price divided by 20.
3. The estimated post-split price may be 1/20 of the EOD price on 3rd, June.
4. All pending orders at the time of the split (Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit, Sell Stop Limit) will be cancelled.
5. All AMAZON holding positions and pending orders on DEMO account will be closed as a result of the stock split.
Q. What is a stock split?
A. A stock split is a corporate action taken by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector, to divide their existing shares into two or more shares.
Q. Why do stocks split?
A. The primary motive is to make the shares more affordable to small investors even though the underlying value of the company has not changed. Amazon would like its stock to be more accessible to a broader base of investors.
Q. What is the split ratio?
A. Amazon also announced it will split its stock in a 20 for 1 offering.
Q. What will this split mean to investors?
A. Each share of AMAZON stock that an investor owns before Ex-Date (June 6th, 2022) will be eligible for stock split. Investors will receive nineteen additional shares and the stock price will be 1/20.
Here is an example:
If an investor owns 100 shares and the market price is $2,400, $2,440 as take profit. After 20 for 1 stock split, the investor will own 100*20= 2,000 shares and the estimated post-split price would be $2400/20 = $120, and the take profit price will adjust to $2,440/20=$122.
Q. Does the 20 for 1 stock split mean the value of my AMAZON shares will increase nineteen times?
A. Unfortunately, not. As stated in the above example, the increase in the number of stocks means every share is now worth less than its previous value, precisely, it’ll be 1/20th the previous value.
Q. How do stock splits affect short sellers?
A. Stock splits do not affect short sellers in a material way. There are some changes that occur as a result of a split that affects the short position, but they don’t affect the value of the short position(s).
If you have any questions, our team will be happy to answer your questions. Please mail to [email protected] or contact the service online.
