What happened
Thursday is looking like it's going to be a rough day for holders of many e-commerce stocks. As of 11 a.m. ET, shares of both e-commerce platform provider Shopify (SHOP 4.90%) and the South American online retail giant MercadoLibre (MELI 1.96%) were down by about 6.8%. Meanwhile, Singapore-based Sea Limited (SE 4.34%), which operates the Shopee marketplace in Southeast Asia, was suffering an 8.5% meltdown.
Image source: Getty Images.
So what
There's no obvious answer as to why these stocks lost ground -- no analyst downgrades nor downbeat press releases from any of the companies. That being said, there is one common thread connecting these companies: They all operate in e-commerce, and while they may not compete much with each other directly, their stocks all compete for investor attention with the biggest name in the space: Amazon.com (AMZN 1.30%).
And you've heard what Amazon is up to, right?
Late on Wednesday, for the first time this millennium, Amazon announced a stock split. Following the 20-to-1 split, its shares will have a more investor-friendly price tag of about $145, based on current valuations.
And adding to the excitement, Amazon announced that it will spend up to $10 billion buying back its shares.
Now what
Particularly in an era when buying fractional shares isn't all that difficult, stock splits are essentially non-events that do little more than take a corporate "pie" that already exists and cut it up into smaller pieces. They don't make that pie any bigger -- nor do they make it inherently more valuable.
This doesn't mean that stock splits don't excite investors, however. This one might temporarily distract them away from the likes of Shopify, Sea Limited, or MercadoLibre, and entice them to buy shares of Amazon instead.
Additionally, Amazon's move may help to highlight the advantages of its diversified business model. It earns nearly three times more profit from providing cloud-computing services than it does from selling stuff online. With Amazon Web Services as its real profit-driver, it has a greater ability to under-price and out-compete its e-commerce rivals in the U.S. and around the globe. And so long as that remains the case, many investors may decide that Amazon is the best e-commerce stock to own.
They may be right about that, too.
