After Google, Amazon Announces 20-for-1 Stock Split; Board Approves $10B Stock Buyback Programme

Amazon.com, Inc. $AMZN: $2,910.49(-0.88%) on Wednesday, announced its stock split, informing investors that they will receive 20 shares per share they currently possess. The stock soared 6% in extended trading.

Besides, the company’s board approved a buyback of up to $10 billion worth of shares.

Stock splits are superficial and have nothing to do with the core fundamental impact on the company’s business. It helps the shares accessible to more hands because of their affordable prices.

Amazon Share Price Determination:

If the split were to take place as of Wednesday’s close, the price of each share would drop from $2,785.58 to $139.279 apiece, and existing shareholders would receive 19 more shares for each one they now own.

“Subject to shareholder approval of the Amendment, each Company shareholder of record at the close of business on May 27, 2022, will have 19 additional shares for every one share held as of such date reflected in their accounts on or about June 3, 2022. Trading is expected to begin on a split-adjusted basis on June 6, 2022,” the company said in a statement.

Which All Companies Have Announced Stock-Split Lately?

Amazon is the latest in the list of the tech companies that announced the 20-for-1 split of the Company’s common stock to lessen the price of share per piece. Similarly, Google parent Alphabet announced a 20-for-one split in February.

While Apple declared a four-for-one split and Tesla went ahead with a five-for-one Split in mid-2021.

CEO Andy Jass, who replaced Jeff Bezos as president and CEO of Amazon on July 5, 2021, had a rough beginning to his tenure. The stock lacked behind the other Big Tech companies last year, and this year, so far, has fallen 16 percent, joining a sector-wide slide.

Amazon Stock-Split Aims To Help Corporate Staffers

Amazon, which has recently modified its compensation strategy, said the latest act of stock-splitting would help corporate staffers.

“This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company,” an Amazon spokesperson said in a statement.

In February, Amazon hiked its maximum base salary for corporate workers to $350,000 from $160,000 to remain relevant in the highly competitive market and retain their top talents. Historically, Amazon had been showing generosity by awarding stocks to talents to attract them, but in 2021 the Amazon stock put forth a lackluster performance. Therefore, the e-commerce company was under immense pressure from the employees to make suitable changes in their remuneration policy to boost the burnt-out employees’ confidence in the company.

A Quick Glance: A Timeline Of Amazon’s Stock-Split History

It is the fourth time Amazon announced a stock split since its market debut on May 15, 1997.

In April 1998, Amazon split 2-for-1 shares, w.e.f June 1998, for stockholders of record on May 20, 1998.

In November 1998, Amazon disclosed a 3-for-1 split of shares, w.e.f January 5, 1999, for stockholders of record on December 18, 1998.

In July 1999, Amazon declared a 2-for-1 split of shares, w.e.f September 1, 1999, for stockholders of record on August 12, 1999.

Stock Activity:

On the dashboard of Encome.io, the stock activity of Amazon increased more than 400% following the announcement. It turned out to be the top trending stock on the dashboard.

During the after-trading hours, the price of each share shot up to $3060 apiece, up 9.85%.

During the pre-market hours, on Thursday, the shares of Amazon were trading up by more than 4%. It opened at $2,913.70 apiece.