Back in March, e-commerce giant Amazon (AMZN 2.12%) announced that it would conduct a 20-for-1 stock split, and in May, shareholders voted to approve it.
For every Amazon share that previously existed, 20 have taken its place. In turn, the price of each Amazon share has shrunk in proportion.
One share of Amazon traded at $2,447 last Friday prior to the split, so dividing that number by 20 means the new share price is $122.35.
But the market valuation of Amazon has remained the same, at $1.2 trillion, which makes the stock split entirely cosmetic.
Companies like Amazon do this because it makes their stock more accessible to smaller investors, and the hope is that their shareholder base broadens with some of these new buyers.
But fundamentally, the case for buying shares in Amazon stays exactly the same, and here's what it is.
Amazon was founded in 1994 by Jeff Bezos, who set out to leverage a concept called e-commerce to sell books online. His idea was met with plenty of skepticism, but by 1997 the company had over 1 million customers and opted to list publicly on the tech-focused Nasdaq.
But Amazon owes its success to its aggressive expansion into new markets, which is a strategy it still maintains today.
It has driven lightning-fast growth to the point where even the world's most famous investor, Warren Buffett, regrets not buying Amazon stock in the early days.
Beyond e-commerce, the company now leads the entire cloud services industry through its Amazon Web Services (AWS) division, which has become the company's profit engine.