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Amazon Stock Split, $10 Billion Buyback In The Works

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An Amazon stock split, as well as a stock buyback, is currently in the works. Online retail titan Amazon will hold its first stock split since the late 1990s. In addition, the Amazon board also approved a stock buyback on up to $10 billion worth of shares.

RELATED: Amazon Fined for Not Reporting COVID-19 Infections to Workers

Amazon Stock Split Gives Shareholders 20 Shares For Every Share Held

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Each shareholder will receive 20 shares for each one they hold. As a result, share prices went up by more than 6% in extended trading. Stock splits do not do anything for the company. Its main purpose is to make the price more affordable for investors through dilution.

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If the split happened during Wednesday’s close, the share price would come down from $2785.58 to $139.28. This is about 1/20th of the original price. Each shareholder will also receive 19 additional shares, each one reflecting the new share price. 

Amazon Joins Apple and Google in Splitting Its Stocks

The last time an Amazon stock split happened was 23 years ago in 1999. Amazon back then was a fraction of the size it is now. Since its inception in 1997, the company initiated a stock split four times. The first one was a two-for-one split in 1998. Then, it split stock twice in 1999, with the first being a three-for-one offer, while the second was two-for-one. 

In addition, the latest Amazon stock split follows those of Google parent company Alphabet, Apple, and Tesla. Tech industry shares exhibited high growth during the past few years, and companies had to split their stocks in order to bring share prices down. Alphabet announced a 20-for-one split last month. Meanwhile, both Apple and Tesla split stocks last year. 

Amazon Stock Split To Help Corporate Workers With Stocks

Amazon CEO Andy Jassy experienced a rough start to his career as an Amazon leader. Among Big Tech companies, Amazon became the worst performer. The company’s stock already lost 16% this year alone. It also reported its slowest growth rate for any quarter since 2001. Meanwhile, activist investor Dan Loeb told investors that the company has around $1 trillion in untapped value. Loeb is quietly amassing a formidable number of shares in Amazon. 

According to the company, the Amazon stock split aims to help corporate staffers. In a statement, a company spokesperson said that flexibility and accessibility are the keys. “This split would give our employees more flexibility in how they manage their equity in Amazon,” the spokesperson said.  At the same time, the Amazon stock split “helps make the share price more accessible for people looking to invest in the company.” 

Amazon shareholders will receive their additional stocks at the close of business on June 3. Trading under the new split-adjusted cost will start on June 6. Since its last split in 1999, Amazon shares rose by over 4,300% in value.

Watch the CNBC Television  video reporting that Amazon announces 20-for-1 stock split

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