Published , by Asif Khan
Published , by Asif Khan
Amazon's board of directors approved a 20-for-1 stock split on Wednesday afternoon. This is the fourth stock split in the company's history and the first since 1999. Amazon's board also approved a $10 share repurchase program. All of this news had shares of AMZN jumping nearly 10% in the after-hours trading session.
Amazon's share price is rather steep these days, trading around $3000/share. After the 20-1 stock split, shares will trade closer to $150/share. It's important to note that stock splits only affect the nominal price of shares. Existing shareholders will have 20 shares for each one share they own at the time of the split and the share price will decrease accordingly. The stock split is set to take place on June 6, and will affect shareholders of record on June 3.
Amazon (AMZN) shares are up over 4,000% since the last stock split executed on September 2, 1999. While stock splits don't affect the company's underlying financial results, there are some other market factors to consider. Amazon is now way more likely to be added to the price-weighted Dow Jones Industrials Index, which would make sense as it is one of the largest companies on Earth. Amazon also has dominated the retail space to the point that their results provide a solid read into how the broader economy is performing, making it a great candidate to be included in the Dow.
The other big piece of news coming out of Amazon's board of directors meeting is the announcement of a $10 billion share buyback.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.