After most forward splits, the stock historically drops so you have to short it FAST on the FS news. It happened with Facebook, short fast the price drops and cover before the rise back up. When Amazon was $24?? per share, in the trade data most buyers bought only one share. Its impressive to say you own Amazon stock even when its just one share. And those who bought one share did not really think it would make them much of a return. Even if they paid $1000 and sold it for $2000, $1000 is hardly wealth. Also we know Amazon will not rise from $2000 to $20,000 with $18,000 still not significant.
So when people bought Amazon at $2000+ they never intended to sell it so it really became bragging rights. I remember at a party my girlfriends husband was bragging about his Amazon stock. When someone asked him how many shares he owns he said he does not like to talk about that. If that is the case why mention you own the stock in the first place? My friend said he only owns one share to brag so the fact is he cannot sell it or he would be lying saying he owns Amazon stock.
The 20/1 split has allowed those who did only own one share at $1000 more or less who now have 20 shares allows them to sell 19 shares and make a few bucks while still being able to say the own Amazon stock (1 shares at $100 and change). The drop in price since the split is from those who only owned one share who can dump 19 shares and still brag they own Amazon. When those sellers are out, the price will rise up fast. When people also see they can buy in at $100+ now they also anticipate the stock going back to $2000 but are not buying much to make a dent in the liquidity. Once the single share holders are done selling and those who could not afford $2000 per share jump in with $100 or maybe $300 the stock will jump back beyond the split price. But by how much? $20, $100?
My guess is the price will rise well above $250 per share ($5000 pre-split per share) that seems like impossibility but look at it this way. People historically will buy less for more of just about anything same with stocks. I call is the convenience store investment strategy.
People will go to a convenience store and you see guys buying one can of beer for $2 or even a 16 ounce bottle of water for $3 or a small Hershey kiss for $.25 cents. If they bought the six-pack of beer for $4.99 each can would cost under $1 so they pay more than twice the can price when buying just one. Same with water. If they just bought the Hershey bar for $1.00 that has the equivalent of 8 kisses it would not cost them $2 but half price.
That is why Amazon stock will rise soon. Because people will only buy one or two shares even at a premium. They won’t care if the price is $250 because its cheaper than $2500 or $5000 pre split so they will pay more just to get one or two shares into their account for no other reason except to brag they own Amazon and to also believe it can go back to $2500 per share but that would be $50,000 pre split prices but they don’t think that way.
If you told most investors they could buy 20 shares of Amazon on sale for $2000 most will just opt to buy one share for $200 (twice the sale price). That is why this stock will run soon. Clear out the one-share holders reducing what they own and enter the ones who will pay a premium who could not afford $2000 per share.
The main reason Amazon stock went up in price was from one-share buyers who never sold the one share. That created a huge buyers market and fewer sellers. That same event will soon happen again. Buy now and hold as the convenience store buyers enter the market.
It is always easier for a low priced stock to double then a high prices stock to double. That is what makes the diluted sub penny stocks so popular. The logic is a stock buy in at $.0001 if it even goes to a penny they make a killing. The same percentage would mean a $10 priced stock would have to rise to $1000 or Amazon pre split price of $2500 to rise to $250,000 per share. Hitting one penny from $.0001 is easier than Amazon hitting $250,000 per share.
If Amazon did a 1000 for 1 forward split taking the price down to $2.50 per share. Millions would have jumped to buy as many shares as they could for $100, $250 and even $1000's driving the price to $8 per share that would still seem a bargain. Keep in mind that would equate to the pre split price being $8000 per share that would seem highly unlikely but $2.50 to $8.00 seems more obtainable. We shall soon see.
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