Andy Jassi, Chief Executive Officer of Amazon.Com Inc., during the GeekWire Summit in Seattle, Washington, USA on Tuesday, October 5, 2021
David Ryder | Bloomberg | Getty Images
Amazon announced its first stock split since the dot-com boom, telling investors on Wednesday that they will receive 20 shares for every share they currently own. Shares rose 6% in extended trading.
The company also said it plans to buy back shares worth up to $10 billion.
The stock split is cosmetic in nature and does not fundamentally change anything about the company, except perhaps that the shares become available to more investors due to their lower price.
If the split had taken place as of the end of Wednesday, the value of each share would have increased from $2,785.58 to $139.28, and each existing holder would have received 19 additional shares for each one they held.
Amazon joins a string of highly valued tech companies pushing down the price of each share through a stock split. Alphabet, Google’s parent company, announced a 20-to-one split in February. In mid-2020, Apple unveiled plans for a four-to-one split, and Tesla told investors it was introducing a five-to-one split.
CEO Andy Jassi has had a difficult start to his tenure, which began in July. Shares were the worst among big tech companies last year and are down 16% in 2022, joining the sector-wide decline. Amazon just reported its slowest growth rate for any quarter since 2001, and according to a recent Wall Street Journal report, billionaire activist investor Dan Loeb, who has been building up his Amazon holdings, told investors over a private phone call that he sees about 1 trillion dollars. in unused value in the company.
The shares will be distributed to Amazon shareholders at the close of business on June 3, with split-adjusted trading starting on June 6.
This is Amazon’s third stock split since its 1997 IPO and the first since 1999 when the company was several times smaller than its current size. On June 2, 1998, it also split on a two-for-one basis; three to one on January 5, 1999; and two to one on September 2, 1999.
Amazon shares are up more than 4,300% since the last stock split was announced.
— Ari Levy of CNBC contributed to this report.
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