Amazon Stock Could Get Much Cheaper with 20-for-1 Stock Split
Amazon announced that its Board had approved a 20-for-1 stock split, sending the stock soaring on Wednesday, March 9. In addition, the company also announced that the Board approved a $10 billion stock buyback.
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The stock was up 5.3% in pre-market trading on March 10.
The stock split is subject to shareholder approval at the 2022 Annual Meeting of Shareholders scheduled to take place on May 25, 2022, Amazon said in a Securities and Exchange filing. If approved, at the close of business on May 27, 2022, each shareholder 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, according to the SEC filing.
Amazon joins the likes of Alphabet, which announced a 20-for-1 stock split in February, also sending the stock soaring at the time.
A split would enable more investors to afford to invest in Amazon and it would broaden the company’s audience and reach. For example, using March ninth’s closing price of $2,785, Amazon’s stock would be worth $139 a share with a split.
An Amazon spokeswoman told The Wall Street Journal that the split will make the split-adjusted share price more accessible for potential investors and will allow employees more flexibility in how they manage stock-based compensation.
The Wall Street Journal reports that Amazon has previously split its stock several times, though it hasn’t done so since 1999, a year in which the company had net sales of $1.6 billion. Last year, the company had net sales of $469 billion and a market value more than 100 times higher than in early 1999, according to The Wall Street Journal.
On March 5, CFRA Research issued a Buy Opinion on Amazon, reflecting expectations for further ecommerce market share gains and potentially sizable upside for the AWS business amid accelerated secular shifts through the pandemic, according to a note sent to GOBankingRates.
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“Against tempered expectations, AMZN’s better-than-expected Q4 2021 results through the last holiday season and its somewhat conservative Q1 2022 guidance eased some concerns while it navigates inflationary pressures and supply chain disruptions in the pandemic’s fallout,” CFRA wrote. “We see further upside to the return on ratcheted investments that will likely enhance the longer-term economics of the Prime membership base.”
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