Skip to content
Business bureau

Business bureau

Business broker

Primary Menu Business bureau

Business bureau

  • Google My Business
  • business bureau
  • Business Ideas
  • Business News
  • Business Plan
  • Finance News
  • About Us
    • Advertise Here
    • Contact Us
    • Privacy Policy
    • Sitemap
  • Google My Business

Amazon Vs. Google: Which Is The Better Stock Split Buy?

Dayle Venture June 23, 2022
Universally popular brand logotypes

pressureUA/iStock Editorial via Getty Images

Introduction

In 2022, mega-cap tech stocks have come under pressure amidst a broad market sell-off. However, a spectacular bull run over the last few years has led some of these names to trade at high (four-digit) stock prices, making them unaffordable for retail investors. With high-profile companies like Amazon (NASDAQ:AMZN), Alphabet (GOOG) (NASDAQ:GOOGL), and Tesla (TSLA) announcing stock splits in the first half of this year, I feel obliged to share my thought process around stock splits and my positioning related to these mega-cap tech names. In my latest public article, I discussed Tesla and outlined my logic for avoiding its stock at current levels. Despite the announcement of a 3-for-1 stock split in the after-hours sessions, I continue to remain neutral on Tesla. With that being said, I am very much bullish on Amazon and Alphabet:

  • Is Amazon’s Stock Price Near The Bottom, Or Will It Continue To Drop?
  • Microsoft Vs. Google: Which Stock Is The Better Buy?

Among mega-cap tech stocks, I own Meta Platforms (META) and Amazon; however, these are long-term “buy and hold” investments for me. While Alphabet is not currently a part of my individual portfolio, the decision to concentrate into Facebook and Amazon has nothing to do with Alphabet’s business but the structure of my portfolio.

In today’s note, we will analyze Amazon and Alphabet to evaluate them as potential buys considering their respective 20-for-1 stock splits. As you may know, Amazon completed its stock split on June 3, 2022 (announced on March 9, 2022). And Google’s stock split is set to happen on July 15, 2022 (announced on February 1, 2022). Since their respective announcements, both Amazon and Google are down by ~20%. I think it is fair to say that stock split announcements haven’t helped Amazon’s or Google’s stock.

What is a stock split?

A stock split increases the number of shares outstanding and decreases the share price proportionately, with market capitalization remaining constant. Here’s what a stock split looks like:

Google's stock split

personalfinanceclub.com

While stock splits do not impact business fundamentals, they are a proven source of (near-to-medium term) alpha generation. Historical data (from 1980) shows that, on average, companies tend to outperform S&P 500 (SPX) by 16.3% (12-months after their stock split announcements).

Stock Splits

BofA Research Investment Committee, Bloomberg

Theoretically, the stock price of companies showing strong business momentum rise to elevated levels. When these companies execute stock splits, the affordability and liquidity of these stocks go higher, and the removal of perception of a high stock price leads to the discovery of true value. Hence, stock splits are broadly viewed as bullish catalysts.

In investing, nothing is guaranteed, and that is true for stock splits too. Historically, 30% of stock splits tend to result in negative returns (12 months after the announcement). However, the positive outcomes are more frequent and tend to be of larger magnitude. Both Amazon and Google are good long-term buys at current levels, but let’s analyze these stocks for a shorter-term investment (6-12 months) to identify the better stock split buy. In order to do so, we shall compare Google and Amazon based on fundamental, quantitative, and technical data.

Google Is The Better Stock Split Buy

In the last twelve months, growth rates for both Alphabet and Amazon have been trending down; however, Alphabet’s Q1 2022 growth rate of 23% was healthier than Amazon’s Q1 growth of 7%. Now, Amazon’s top-line numbers do not tell the whole story because the weakness in its retail ecosystem is masking the strength in AWS and digital ads businesses. If we go by cold hard factual data, Google is a cash flow machine that has generated ~$69B over the past twelve months, whilst Amazon has burnt ~$25B during the same period. Hence, Google is growing faster, and it is much more profitable.

Google Vs Amazon

YCharts

Looking at key balance sheet metrics, it is fair to say that both Amazon and Google are well-capitalized companies. While Amazon’s net cash balance of $18B seems somewhat precarious considering its recent cash burn issues, I believe that Amazon will return to positive free cash flow generation over the next 12-18 months. With a net cash balance of $121B, Google’s balance sheet is pristine. In comparison, Google’s balance sheet is better than Amazon’s.

YCharts

YCharts

In addition to its financial results and balance sheet,
Alphabet’s capital return program outshines that of Amazon. While Amazon recently announced a $10B stock buyback program, it is not substantial considering its market cap of $1.1T. On the other hand, Google repurchased roughly ~$52B worth of its shares over the last twelve months and added another $70B to its stock buyback authorization in late April. Clearly, Google’s stock has far greater support from its buyback program compared to Amazon.

YCharts

YCharts

Now, let’s turn our attention to quantitative data.

According to Seeking Alpha’s Quant Rating system, Google is rated as a buy, whereas Amazon is rated as a hold. While both companies have the same factor grade (A+) for profitability, Google is rated higher than Amazon on Valuation, Growth, Momentum, and Revision. Hence, from a factor grade perspective, Google is the better buy.

Seeking Alpha

Seeking Alpha

Seeking Alpha

Seeking Alpha

Since the Fed’s pivot in November, both Google and Amazon have been trending lower, with the sell-off getting worse in recent weeks. So far, Google has held a support zone at $2,000, and it is currently forming a base above this support. A breakdown of this support opens up downside to 200DMA levels of ~$1,750, with the next demand zone located at $1,500. With an RSI of 36, Google is close to oversold territory; however, the MACD is still trending lower (despite being highly negative).

WeBull

WeBull

Amazon’s technical chart is looking weaker than Google’s, with the e-commerce giant’s stock trading below its 200DMA (after recent rejection at this level). Now, Amazon’s stock is sitting above a strong demand zone; however, if the support at $105 is broken, the stock could break down to $87. With an RSI of 32, Amazon is nearly oversold; however, the MACD is still trending lower.

WeBull

WeBull

The technical setup for both Google and Amazon is bearish. From a long-term perspective, broken technical charts could be great buys if business fundamentals are robust. If we consider relative valuation, Google is trading at a P/E ratio of ~20x while Amazon is trading at a P/E ratio of ~53x. Even after factoring in growth, Google is cheaper than Amazon.

YCharts

YCharts

Concluding Thoughts

My followers know that Amazon is one of my largest positions; however, that position is based on a long-term time horizon (5+ years). If I must choose between Google and Amazon as a stock split (short-term, less than 12 months) buy, I would go with Google due to stronger fundamental and quantitative data, similar technical setup, and lower relative valuation.

Key Takeaway: I rate both Amazon and Google as “Strong Buys” at current levels; however, as a stock split (near-term catalytic) buy, I prefer Google.

As always, thank you for reading, and happy investing. Please feel free to share any thoughts, questions, or concerns in the comments section below.

Tags: ""Succeeded His Business"", "Business Plan Loan Originayor, 2 Of Cups Business, 525 Business 5 Bankruptcies, Accounting Business Letter To Client, Bracken Business Communications Clinic, Business Account No Deposit, Business Administration Fafsa, Business Balance Sheet Explained, Business Card, Business Card Printing La Plata, Business Card To Secret Website, Business Cards Media Bar, Business Central Png, Business Coaching Site Cloudfront, Business Contract Lawyer 47201, Business Marketing Pearson Quizlet", Business Milleage Leager 18, Business Mobile Broadand Plans, Business Plan For Supplement Company, Disrupting Digital Business Harvard, Ffiec Business Continuity Templates, Gauge Ear Piercing Business, Good Openings For Business Letters, Holton Investment Business, Indiana Wesleyan University Business, Indianapolis Business Times, List Business In Search Engines, List My Business Yahoo, Lunch Susbcription Business Model, Morgan Hill Business Liocense Renewal, Nee Small Business Bill Signed, Negotiating Business Acquisitions Practical Law, Networking Trends Small Business, New Business In Shorewood Il, School Business Officer Being Unethical, Small Business Administration Mass, Small Business Comunity, Small Business Corporation South Africa, Small Business Depew Llc, Small Business Medical Offices Chicago, Small Business Office Lakewood Nj, Small Business Plans Verizon, Small Business Storage Array, Small Business Sucess Stories, South Florida Business Journal Twitter, Torrington Ct, United Business Tech Response Sla, United Domestic Business Food, Video Business Woman Bukkake, Ways To Improve Business Technologyreddit

Continue Reading

Previous How Does A Marketing Strategy Help Your Online Business Grow
Next 7 Top Ways To Gain Visibility

More Stories

The SEO Guide to Domain Names
  • Google My Business

Retail Compliance: Regulations, Examples, & Tips

Dayle Venture December 5, 2022 0
Fake negative comments - Bluewire Media
  • Google My Business

Fake negative comments – Bluewire Media

Dayle Venture December 5, 2022 0
Martech Differentiation is at the Decision Layer
  • Google My Business

Why there are 10,000 martech products that “kinda all do the same thing” (but not really)

Dayle Venture December 5, 2022 0
June 2023
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930  
« May    

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • October 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • December 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • November 2018
  • December 2016

Recent Posts

  • PPP Loan Forgiveness Status for 2022
  • Marketing 101: What is (particular about) digital marketing?
  • The Marketing Practice Appoints New ECDs To Drive Global Growth
  • How to choose an effective brand name
  • B2B Influencer Marketing A Growing Priority, LinkedIn’s Scheduled Posts & Competitor Analytics, & The Media Time Paradox

BL

seo.buybacklinks.online

Tags

"Women'S Business Casual Amazon Fba Business Atlanta Business Chronicle'S Att Business Login Boss Baby Back In Business Business Administration Degree Business Attire Women Business Card Design Business Cards Templates Business Casual Dress Business Casual Outfits Business Checking Account Business Credit Card Business For Sale Near Me Business Intelligence Platform Business Lawyer Near Me Business Loan Calculator Business Name Ideas Business Professional Women Business Spectrum Login California Business Entity Search Capital One Spark Business Carl Weber'S The Family Business Charlotte Business Journal Custom Business Cards Delaware Business Search Florida Business Search Fl Sos Business Search Harvard Business Publishing Insurance For Small Business Kelley School Of Business Maryland Business Express Maryland Business Search" Moo Business Cards National Business Furniture New York Business Search Ohio Business Gateway Onedrive For Business Online Business Ideas Paramore Misery Business Risky Business Cast Small Business Insurance Spectrum Business Customer Service Tom Cruise Risky Business Us Small Business Administration

Visit Now

Mo Secretary Of State Business Search

scorpion exterminator las vegas

Related Article

HubSpot Deal Stages: 7 Keys to Success
  • business bureau

PPP Loan Forgiveness Status for 2022

Dayle Venture June 9, 2023 0
Marketing 101: What is influencer marketing?
  • Business Ideas

Marketing 101: What is (particular about) digital marketing?

Dayle Venture June 8, 2023 0
The Marketing Practice Appoints New ECDs To Drive Global Growth
  • Business Ideas

The Marketing Practice Appoints New ECDs To Drive Global Growth

Dayle Venture June 7, 2023 0
Onclusive Expands US Footprint with Critical Mention
  • Business Ideas

How to choose an effective brand name

Dayle Venture June 6, 2023 0
2022 December 2 Pega / ANA Chart
  • Finance News

B2B Influencer Marketing A Growing Priority, LinkedIn’s Scheduled Posts & Competitor Analytics, & The Media Time Paradox

Dayle Venture June 5, 2023 0
Ewwlo.xyz | CoverNews by AF themes.

WhatsApp us