Amazon.com, inc (Amazon) announced last week its plans for a 20-for-1 split and a share buyback of up to $10bn on May 27, with trading on the new split-adjusted basis beginning on June 6, though an approval from shareholders at Amazon’s annual general meeting in May is required for the plan to proceed.
Amazon shares have been trading around 2,708 and once the split was reported, they gained more than 5%. In general, announcements of stock splits tend to add positive momentum to Wall Street, especially during a time when the world economy tries to come out of the pandemic, but at the same time the market battling the current events from Russia invading Ukraine. Sanctions have sent oil and gold prices on an upward movement for the past 3 weeks inversely, the stock market has taken a bit of a blow. This stock split will enable more participants to trade Amazon shares, consequently resulting in more liquidity.
According to the announcement, the $10 billion buyback plan replaces the previous $5 billion plan, of which $2.12 billion in shares have been repurchased, while the split is upon shareholder approval in May. If the shareholders approve the split, the price will drop to about $150 a share. That should entice new retail investors, and perhaps even earn it a spot on the Dow Jones.