The Amazon.com board gave a green light to the 20-for-1 stock split following a $10 billion buyback plan authorization. On Wednesday, March 9, e-commerce announced it would make this action for the first time in over 20 years.
Amazon Splits its Common Stock in 2022
According to a report by Reuters, Amazon shared its plans to boost its company's shares by 7% in extended trading. In doing so, a 20-for-1 split will take place to attract more investors.
The publication wrote that this was the first case of stock split that the Seattle firm implemented since 1999. This means that for every share that the investors hold, they will receive 19 additional shares.
In addition, Reuters included that the trading which will be based on the new stock price is set to roll out on June 6.
Following this report, there's also a $10 billion share-buyback authorization. This shortly contributed to the 11% surge of the Amazon shares in the post market trading.
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'More Flexibility' in Employees' Equities
In a separate report from Bloomberg, Amazon responded via email that the decision to split the stock is for their employees.
Particularly, this would give them a leeway to handle their equity flexibly, not to mention the company's aim to pave the way to the accessibility of the stock.
According to DA Davidson & co. analyst Tom Forte, the e-commerce titan appears to be picking up some knowledge from Apple regarding the investment of a "slower-growing tech" company.
"The stock split is kind of an old school strategy to lower your share price to stimulate interest among retail investors. The stock buyback tells investors they have plenty of money sitting around and aren't planning a big investment on building new warehouses." Forte mentioned.
What About Alphabet's Stock Split?
Aside from Amazon, another company has previously done a stock split. Tech Times reported last month that Google's parent firm Alphabet came up with its decision to increase outstanding shares by approving a 20-for-1 split.
The tech titan aimed to lure more investors who might be interested in purchasing "affordable" shares. After the changes took place, Alphabet witnessed that its stock skyrocketed to more than 9%.
So far, Amazon and Alphabet are the latest big corporations to jump on the stock split trend. Bloomberg noted that they are the last two tech giants in the US with four-digit stock prices in the context of revenue.
The stock price of Amazon was recorded to be sitting at $2,785.58 on Wednesday. Apple, Tesla, and Nvidia have also split their stocks two years ago.
In other news, Tesla announced that its Ukrainian workers will receive a salary worth three months if they help in defending their country against Russia.
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This article is owned by Tech Times
Written by Joseph Henry
