By
Bena Ilyas
May 13th, 2024
Amazon 20-for-1 makes it the latest tech company splitting its shares. Apple had its 4-for-1 stock split in 2020, while Google’s 20-for-1 split was in February. Tesla is planning a 5-for-1 split.
Multinational technology outlet Amazon (NASDAQ: AMZN) has announced to split its shares 20-for-1 with an increased stock purchase of $10 billion. After the announcement, its shares surged 5%, making it the second-best trading day for the business in 2022. The first time was on the 14th of February, with a 14% surge after the publication of its Q4 report.
Companies split shares to offer them at a lesser price than their original value to get more investors. It does not necessarily indicate a downtime for the business or deters its cause and prospects. For Amazon, the stock split by 95% will afford its inclusion in the Dow Jones Industrial Average (DIJA).
Since its establishment over two decades ago, Amazon has had three stock splits. Beginning from a 2-for-1 basis in 1998, a 3-for-1 basis in January 1999, to 2-for-1 on the 2nd of September, 1999. This current stock split is the fourth. Since the year began, Amazon shares have been down nearly 12% and was the worst stock among other tech companies in 2021. The split and buyback are likely CEO Andy Jassy’s way of appealing to shareholders who have stuck along. That is, in addition to contending at the Dow Jones.
Amazon 20-for-1 makes it the latest tech company splitting its shares. Apple (NASDAQ: AAPL) had its 4-for-1 stock split in 2020, while Google’s 20-for-1 split was in February. EV maker Tesla (NASDAQ: TSLA) is still planning a 5-for-1 split.
Amazon Trade Data after the 20-for-1 Authorization
MarketWatch wrote that Amazon shares climbed 5.41% to $2,936.35 on the 10th of March. Meanwhile, the S&P 500 Index SPX lost 0.43% to 4,259.52 DJIA fell 0.34% to 33,174.07. Amazon closed $836.73 short of its 52-week high ($3,773.08) marked on the 13th of July.
If the split had been implemented on the day of the announcement, the share price would have been $139.28 from $2,785.58. In addition, existing holders would have gotten 19 additional shares to the ones they already own. Amazon shares are up 4,300% since the share split announcement. However, the detailed record of how the shares did during the split will be out on the 3rd of June, and a split-adjusted price will begin on the 6th of June.
To redeem the stock, the Board of Directors authorized Amazon to repurchase up to $10 billion of the company’s common shares. According to Amazon:
“The program allows the company to repurchase its shares in a timely manner when it believes doing so would enhance long-term shareholder value. The buyback authorization does not have a fixed expiration.”
Notably, implementing the stock split and authorized a commensurable increase in shares is still subject to some factors. First is the shareholder’s approval of the change at the Annual Stockholders’ Meeting dated 25th of May.
Amazon stock has dropped 11.94% in its year-to-date record, plunging further by 14.75% in the last three months. In addition to its losses, the e-commerce giant has declined more than 4% over the past month. However, data shows that AMZN has added 0.81% in the last five days.