Amazon shares rise after stock split raises retail interest (NASDAQ:AMZN)

Amazon.com, Inc. (NASDAQ:AMZN) shares rose sharply shortly after Monday’s market open as a lower share price invites retail investors.

Shares of the Seattle-based eCommerce behemoth rose 4% early in Monday’s trading session after a 20-for-1 stock split. While a stock split does not change the fundamentals, nor does it materially improve prospects for the business, stock splits have recently been shown to increase retail trader interest in tech giant stocks and therefore promote share price appreciation.

“Evidence suggests that stock-split events drive additional participation from retail investors, especially in securities with larger market capitalization,” a recent data analysis by the Chicago Board Options Exchange explained. “Volume in mega-cap equities initially spiked 342% the week immediately after the split.”

The impact was actually most pronounced in options markets, with Apple’s recent stock split serving as an instructive example.

“Apple’s unadjusted post-split customer volume increased by 92%, averaging 1.7 million daily contracts executed, compared to 0.9 million contracts pre-split,” the report noted.

As one of the most valuable companies in the world, this dynamic appears to be in effect already for Amazon (AMZN +4.1%). Indeed, the company forwarded a focus on accessibility for the stock split, justifying the move as providing “more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company.”

Still, the CBOE research forecasts this increase in demand to moderate in the course of the next six months, suggesting the pop in retail popularity is short-lived.

Alongside the split, the company will pursue a $10B share buyback program, replacing a previous $5 billion authorization from 2016.

Read more on catalysts expected for the week, including Amazon’s latest move.