Amazon Company Declares 20-for-1 Stock Split, $10 Billion Share Buyback Plan


Amazon, an E-commerce Company, has announced the first split of its stock since the dot-com boom, notifying investors on Wednesday that they will receive 20 shares in exchange for every share they currently own. The stock rose 6% during extended trading.

The Amazon Company further stated that its board of directors had authorized it to purchase the shares buy back up to 10 billion dollars.

Stock splits are considered cosmetic and do not fundamentally alter any aspect of the business, aside from possibly making shares available to a broader amount of investors due to their lower cost.

If the split were to take place as of Wednesday’s close, the price of each share would drop from $2,785.58 to $139.28, and existing shareholders would receive 19 more shares for each one they already possess.

Amazon is the recent high-valued tech company to lower the cost of each share via the split. Few big companies also declared their share split plan, including Google subsidiary Alphabet Company announced a 20-for-1 splitting in the month of February. In the middle of 2020, Apple Company announced plans to split the 4-for-1, and Tesla Company informed investors that they were implementing a 5-for-1 split.

Andy Jassy, the Amazon CEO, has faced a difficult start to his tenure in July. Last year the Amazon stock was a bad performer among the Big Tech companies, and the stock price has dropped by 16% so far in the year 2022, and it is also experiencing a drop across the entire sector.

Amazon has just announced its slowest growth rate in any quarter since 2001. According to the recent Wall Street Journal report, the Daniel S. Loeb billionaire activist investor has expanded his Amazon holdings’ value. On a private call, he said to the investors that he believes around $1 trillion worth of value is not being utilized in Amazon Company.

Amazon Company, which recently made changes to its compensation policy, stated that the most recent change is aimed towards helping corporate employees.

An Amazon spokesperson declared in a statement, “This split will give our employees greater flexibility in the way they manage their equity stakes in Amazon and will make the price of shares more affordable for those who want to invest in the Amazon stock.”

Last month, Amazon Company raised its maximum base wage for the employees in the corporate sector from $160,000 to $350,000 due to an ever-increasingly competitive labor market. The company has relied on lavish stock awards to attract talented employees in the past. However, the Amazon stock underperformed in 2021, and employees have pushed Amazon to change its policies.

Amazon stockholders will receive dividends from the stock split at the end of business on June 3, and trading will resume on a split-adjusted basis on June 6.

It is the fourth break since its IPO in 1997. It’s also the first since 1999 when the company was only a tiny fraction of its current size. The share split was also on a 2-for-1 basis on June 2, 1998; a 3-for-1 share split announced on January 5, 1999; and on a 2-for-1 basis on September 2, 1999.

Since the last split declared, Amazon shares have increased more than 4,300%.