How does Amazon’s 20-for-1 stock split impact its stockholders’ equity?

Amazon announced a 20-for-1 stock split in March 2022. This stock split was its first stock split in over twenty years. On the day that Amazon announced its stock split, one share of its stock was selling for $2,785.58.

The stock split will occur at the close of business on June 3, 2022. The stock will begin trading on the split-adjusted basis on June 6, 2022.

View the video below about stock splits (1:26 minutes) and then answer the questions that are at the bottom of this page after the video.

The video can also be viewed at this link.

Questions

1. What will be the price of one share of Amazon’s stock after the stock split?
2. What are some possible reasons that Amazon might have for splitting its stock?
3. An investor owns 400 shares of Amazon’s stock before the split. After the split, how many shares of Amazon’s stock will the investor own?
4. How will Amazon’s total stockholders’ equity change as a result of this stock split?