After months of anticipation, Amazon.com (AMZN 3.43%) conducted a 20-for-1 stock split that went into effect on Monday. Last week, shares of the internet giant traded for $2,400. Amazon stock is now available for below $130 per share.
Anyone hoping for a big bounce after the stock split was disappointed. Amazon's shares moved a little higher on Monday -- but not by much. It's definitely not too late to buy Amazon stock. Here's why.
Image source: Getty Images.
Nothing has really changed
The main reason it's not too late to buy Amazon is that the stock split didn't really change anything. Sure, shares are now cheaper. Some retail investors who wouldn't have bought Amazon before the 20-for-1 split might now do so.
However, many brokerages already supported buying fractional shares of Amazon. Anyone who really wanted to invest in the stock prior to the split could have afforded to do so using this approach.
As mentioned earlier, Amazon stock didn't surge after the stock split. Actually, shares are now even cheaper than they were when the stock split took effect. This is primarily due to an overall stock market dip than anything specifically related to Amazon.
Absolutely nothing about Amazon's business has changed in the slightest as a result of the stock split. The company remains the 800-pound gorilla in the e-commerce market. It's still the leader in the cloud hosting market.
It's still "Day 1"
Amazon founder Jeff Bezos often stated that it was always "Day 1" for Amazon. As Bezos wrote to shareholders in 2017 about the alternative to having a "Day 1" mindset, "Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1."
You could shrug off the "Day 1" idea as simply sloganeering from a corporate executive. However, there are objective reasons to think that Amazon truly is much closer to the beginning of its journey than the end.
For one thing, e-commerce remains only a small part of the overall retail market. In the first quarter of 2022, e-commerce sales in the U.S. made up only 14.3% of total retail sales. The market penetration rates are even lower in other parts of the world. Amazon still has a significant growth opportunity for its core business as a result.
AWS continues to be a huge growth engine. Revenue for the cloud hosting unit soared 37% year over year in Q1. That's a stronger growth rate than AWS experienced annually over the past two years.
Amazon is also without question in the early innings on several other fronts. Its telehealth and self-driving-car technology businesses remain in their infancy. The company has just started offering its "Just Walk Out" technology, which supports checkout-free shopping, to other retailers.
Don't forget the valuation
We can't overlook the fact that Amazon's intrinsic valuation is the most attractive it's been in quite a while. Some might even argue that the stock is a no-brainer buy at current levels.
Amazon's market cap stands at around $1.2 trillion. AWS could potentially be worth roughly $1 trillion on its own, according to some analysts. If they're right, buying the stock right now would give you the company's massive e-commerce business, its streaming operations, and everything else that isn't AWS at a bargain-basement price.
Forget Amazon's stock split -- the market seems to have already done so. The company's business is strong with great long-term growth prospects. Amazon's valuation is appealing. It's absolutely, positively not too late to buy this stock.
