The Google parent company Alphabet announced it last month. Apple, Tesla and Nvidia did it two years ago. Amazon, the world’s largest online retailer, has now announced that it intends to carry out a share split. What is meant by this is to reduce the par value of Amazon shares and increase the number of shares issued. According to stock market handbooks, the main purpose of this is to reduce the price of a listed stock, making it easier to trade. The measure is primarily of a psychological nature, nothing will change in terms of ownership structure or equity. Specifically, Amazon intends to give shareholders 19 additional shares for every share. The transaction is scheduled to begin on June 6th.
At the same time, the Seattle-based company announced that its board of directors had approved a $10 billion share buyback program. In such programs, the company repurchases shares from the shareholders. The capital market generally assesses share buybacks positively: The share price can therefore rise in the short term.
Bloomberg reported the stock split and massive share buyback could be just the boost the online retailer needs to weather continued weakness in its share price. The paper has lost about 16 percent in value since the beginning of this year alone. The minus in the past twelve months is almost ten percent.
Since the beginning of the year, the stock has fallen about 16 percent
The previous rise in the share, which was also caused by corona measures, has long since passed. The market value had previously almost doubled in the wake of the pandemic. Despite the price decline in recent months, the individual share recently cost a good 2,500 dollars. A price that is hardly affordable for small investors. From the point of view of analysts, the split makes the share certificate more attractive again for small investors.
Morgan Stanley analyst Brian Nowak calculated the per-share price to drop to around $139 based on Wednesday’s close. A company spokesman added that Amazon employees could also manage their share capital more flexibly. The plan initially worked on the stock exchange. The price per Amazon share rose by a good $200 at times after the announcement on Thursday, then fell back somewhat during the day, but remained well up.
Along with Alphabet, Amazon is the last of the top five U.S. tech companies by revenue to have stock prices in the four-digit range. Alphabet’s split is scheduled for July.