Amazon (AMZN 3.49% ) and Tesla (TSLA 2.38% ) may be getting a little cheaper – per share – in the near future. Both companies have announced stock splits. This doesn’t change the overall market value of these superstar companies. But it does bring down their share prices. That means some investors who would have purchased fractional shares – or no shares at all – may choose to buy a full share. Or more.
I already own Amazon and Tesla shares. And I’m interested in buying more. But if I had to choose just one of these winners, which one would it be? Let’s look at a few charts to help us decide which might be the better stock split buy right now.
First, let’s have a look at Tesla. The leading maker of electric vehicles (EV) is in high-growth mode. The company last year delivered a record number of vehicles. And the opening and ramping up of production facilities in Austin, Texas and Berlin, Germany should help the company keep up the pace and even accelerate.
Our first chart shows the growth in Tesla’s deliveries. The EV company nearly doubled deliveries last year from the previous year. It delivered more than 936,000 vehicles last year. And this was in the context of chip supply shortages.
Still, the one thing that worries some investors is illustrated in the next chart. And that has to do with market share. In the chart, we can see the company lost 4.5% of market share from the first quarter through the third quarter of last year. That’s year over year. This is compared to gains for other carmakers. Tesla remains the market leader by far. But it’s still important to remember that competition is on the rise.
Retail e-commerce sales
Now, let’s turn to Amazon. The company is operating in a growing market. The chart below shows retail e-commerce sales climbing over the past several years – and a forecast for more than $ 7 trillion in global sales by 2025.
Amazon is a leader in the e-commerce market. But, perhaps even more importantly, Amazon is also the leader in the world of cloud computing. That’s thanks to its Amazon Web Service (AWS) business. The chart below shows Amazon leading the $ 180 billion cloud computing market with 33% market share. It’s well ahead of competitors. This is significant because AWS makes up most of Amazon’s operating income.
Which stock split player is a better buy today? It’s a tough choice. Tesla’s slight decline in market share isn’t a big concern. The company is a leader by far. But it doesn’t rely on EV sales – it doesn’t have other areas of business. So, I have a slight preference for Amazon. That’s thanks to its strengths in two businesses: e-commerce and cloud computing. So, if I had to choose between these dynamic stock-split players, I’d go for Amazon.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.