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10 Mar 2022

Amazon Announces 20-for-1 Stock Split, Offers $10 Billion Share Buyback

The Index Today

Amazon.com Inc. has announced its decision to split its stocks by a ratio of 20:1 for the first time in over 20 years. The move is likely to put an end to four figure stock prices of prominent American tech companies.

As per Business Standard, in doing so Amazon joins the ranks of other tech giants like Apple and Alphabet Inc. who have split their stocks to boost their appeal to retail investors. If authorized by shareholders, Amazon’s stock split will come into effect by June, 2022. In addition to that, the tech giant has also introduced a program to repurchase their shares by up to $10 billion which has sent Amazon’s shares soaring by 11% during the post-market trading session.

The company revealed in an email that their new decision intends to afford their employees “more flexibility in how they manage their equity” while also making their stock “more accessible” to common investors.

DA Davidson & Co.’s Tom Forte said, “The stock split is kind of an old school strategy to lower your share price to stimulate interest among retail investors.” He contended that this move “tells investors they have plenty of money sitting around and aren’t planning a big investment on building new warehouses.”

©Photo: Reuters

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