Stock Splits Led To Big Gains In Tesla And Apple, But Amazon Stock Has Underperformed: Will The E-Commerce Giant Try A Spinoff Next?

Zinger Key Points
  • Amazon shares are down more than 10% since the company announced a 20-for-1 split in March.
  • Josh Brown says Amazon stock could jump 20% if the e-commerce company were to spin off Amazon Web Services.
Stock Splits Led To Big Gains In Tesla And Apple, But Amazon Stock Has Underperformed: Will The E-Commerce Giant Try A Spinoff Next?

Stock splits have become increasingly popular among mega-cap companies with lofty share prices as splits often lead to increased attention and an appreciation in underlying stock prices, but Amazon.com Inc AMZN has not seen said benefits since announcing a split in March.

What To Know: Several big-name companies, including Tesla Inc TSLA and Apple Inc AAPL, have announced splits in recent years, which has helped propel their respective stock prices higher.

Stock splits don't actually change anything fundamental about the company enacting a split, yet a cheaper share price can make the stock more accessible to a larger number of investors.

Tesla shares have jumped more than 125% since the company announced a five-for-one split about two years ago. The Elon-Musk led company announced another split just last month, and the stock began trading on a split-adjusted basis at the end of August. Apple shares are up nearly 40% since the company announced a four-for-one split in 2020. 

Related Link: Apple's Rivals Bled After It Unleashed Privacy Moves — Now The iPhone Maker Reportedly Plans To Double Its Advertising Staff

Why It Matters: Amazon shares are down more than 10% since the e-commerce giant announced a 20-for-1 split in March. 

Ritholtz Wealth Management's Josh Brown offered an explanation for Amazon's underperformance Tuesday on CNBC's "Fast Money Halftime Report."

Although there was some excitement when Amazon announced the split, by the time it actually went into effect, Amazon shares were already locked into a massive downtrend, Brown said: "This is one of those situations where there were a lot of reasons for it to have had the big bounce, and they just haven't worked out."

What's Next: Since the split didn't act as a catalyst for the stock, investors should be asking what the next driver is, Brown said: "The answer is that there isn't one."

Brown told CNBC that the only thing that could cause the stock to surge significantly would be a potential spinoff of Amazon Web Services. 

"But I don't think the new CEO has the ability to just decide that they want to do that without input from [Jeff] Bezos and Bezos is having way too much fun these days. All you have to do is follow TMZ to understand why you're probably not gonna get that kind of a transaction that would really introduce some excitement into the stock," Brown said.

He noted that if Amazon were to spin off AWS, the stock could jump 20% on the announcement. 

See Also: Amazon Is A Top September Stock Idea From JPMorgan: 'Full Speed Ahead'?

AMZN Price Action: Amazon has a 52-week high of $188.11 and a 52-week low of $101.26.

The stock was down 0.89% at $126.38 Tuesday afternoon.

Photo: courtesy of Amazon.

Posted In: CNBCElon MuskJeff BezosJosh BrownLong IdeasNewsStock SplitTrading Ideas