Amazon Stock Split: Should You Buy Before or After?
Amazon’s Board approved the 20-for-1 stock split announced in March at the 2022 Annual Meeting of Shareholders on May 25. The split will enable more investors to afford to invest in Amazon, and it will broaden the company’s audience and reach.
“The Board anticipated that the increase in the number of outstanding shares resulting from the stock split will reset the market price of the common stock, in a range that would give our employees more flexibility in how they manage their equity in Amazon and make the common stock more accessible for anyone who wants to invest in Amazon,” the company said in a proxy filing.
Amazon said in a Securities and Exchange Commission (SEC) filing in March, that 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’ stock, which is down 34.8% year-to-date, was up 0.5% in pre-market trading on May 27.
According to Kiplinger, markets like splits as they give investors more flexibility, while bearing no impact on a company’s fundamentals or valuation.
“That’s because a split is essentially the same thing as making change. In this case, shareholders will effectively be swapping a $20 bill in return for 20 $1 bills,” according to Kiplinger.
Another factor that might benefit Amazon, according to Wedbush Securities analyst Dan Ives, is that “the shift to the cloud is only 40% complete with a massive digital growth wave ahead that will benefit the company, along with Microsoft, Google, Salesforce and Oracle.”
Amazon is part of a slew of companies that have recently announced stock splits. Shopify announced one in April, and meme stock darling GameStop announced on March 31 that it will request stockholder approval for a stock split at the upcoming 2022 annual meeting, according to a Securities and Exchange Commission (SEC) filing.
Other companies making similar announcements include Tesla in late March, and Amazon and Alphabet, which announced a 20-for-1 stock split in March and February respectively.
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