Time to buy AMZN?

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The Amazon Maven’s views
Amazon’s stock split history says one thing clearly: Jeff Bezos and company have not been a fan of the strategy, at least not since the post-IPO days that also coincided with market exuberance for tech stocks. But the company could change how it views stock splits, considering the upcoming CEO transition.

I believe that Amazon could benefit from a lower nominal share price for at least two reasons. First, although splits should logically not create equity value (remember the pizza example), it has been effective at boosting shareholder morale and investor sentiment. Consider the following:

Apple announced a 4-to-1 split on July 30 of last year, to be executed at the end of August. During this one-month period, AAPL shares climbed 34% to $129 – interestingly, reaching a price that is above current levels.
Tesla (TSLA) executed its first 5-to-1 split in history around the same time: late August 2020. In the three weeks between the announcement and the split execution, TSLA shares surged by a jaw-dropping 80% to about $500.
NVIDIA seems to be heading in the same direction: a stock split followed by increased bullishness for the shares.
Second, at a lower share price, Amazon stock could qualify for the Dow Jones Industrial Average. Since the index uses a price-weighted approach to allocating the holdings, AMZN at $3,000-plus would not stand a chance at being considered for inclusion. At $300 or $150, the story could be different.

Being in the Dow could boost Amazon stock in a couple of ways: (1) more visibility from individual investors that track the index, and (2) a spike in demand from institutional investors (think Vanguard, BlackRock) who would need to buy AMZN shares in order to mirror the Dow’s holdings.

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The U.S. Department of Defense has canceled a planned 10-year, $10 billion cloud-computing contract known as JEDI that had been awarded to Microsoft in 2019, while launching plans for a new multivendor cloud-computing project that will likely be split between Microsoft and Amazon.com.
The government said in a statement that "it has become clear that the JEDI Cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD's capability gaps."

The JEDI contract -- the acronym stands for Joint Enterprise Defense Infrastructure -- was under legal challenge from Amazon (ticker: AMZN), which asserted that the decision to award the contract to Microsoft (MSFT) came under political pressure from former president Donald Trump, who often was unhappy with coverage by the Washington Post, which is owned by Amazon founder Jeff Bezos.

The DoD also said it would launch a revised multiyear, multivendor cloud-computing project to be called the Joint Warfighter Cloud Capability (JWCC), and that Amazon and Microsoft appear to be the only providers capable of meeting the department's requirements.

Amazon shares rallied 4.7%, to $3,675.74, on Tuesday, setting a new closing high on the first trading day since Andy Jassy took over as CEO from Bezos, who remains executive chairman. Microsoft was flat, closing at $277.66.

In a lengthy blog post on the cancellation, Microsoft said that it understands the rationale for the decision.