Amazon Splits Shares First Time Since ’99

Amazon’s board approved a stock split last week. Each issued paper will be divided by 20. Such a move aims to make the shares more accessible for capital management and purchase by investors. Besides, it was necessary because of the new employee remuneration system introduction. As we know, the company pays them in shares, and recently the quotes have decreased by 18% (since the beginning of 2022).

Despite the board’s approval, this move should also receive the shareholders’ permission. Their meeting is scheduled for May 25th. If the majority of participants vote in favor, trading in securities will begin on June 6th. While it is not the first split the company has undertaken since its IPO, it is the first in more than twenty years. Since then, Amazon’s capitalization has grown more than 100 times, and net sales have risen from $1.6 billion to $469 billion.

The decision to split the shares was made on March 9th. As a result, trading on that day closed at just over $2785 per share. If the company had not taken such a step, the cost of one paper would have slightly exceeded $139. According to experts, Amazon managed to double the value of its assets compared to the pre-coronavirus era, when the demand for cloud services and e-commerce skyrocketed.

Also, at the beginning of March, the board of directors adopted a buyback plan for $10 billion. The previous $5 billion program has been in place since 2016. The company bought back just over $2 billion worth of shares during this period. Amazon is not the first among the e-commerce and tech giants to go through a share split in recent years. Previously, Tesla, Apple, and Nvidia have resorted to this step. Google Alphabet joined this list last month.

Do you follow the state of the stock market? Do you think the split can stop Amazon’s price drop? Will this move help the company enter the Dow Jones Industrial Average?