Elaine Jean Tech 03.10.2022 02:Mar AM EST

Amazon Pull Down Stock Prices from $2,785 to $139 Through a Stock Split; Board Buys Back $10 Billion Shares

Amazon is reportedly splitting its stocks. If the company's board approves, this would mean a more affordable stock price for everyone hoping to get in on the action.

Amazon stocks will be 20 times more affordable. This move can entice retail investors to invest more in the company.

Amazon Stock Split

Amazon is splitting its stock to 20-for-1. This means that Amazon shareholders with 1 stock will now receive 20. The Amazon stock split was reported on Wednesday, March 9, and then its stock price went up 6% in extended trading.

In addition, it was also reported that Amazon's board of directors had authorized it to buy back up to $10 billion in shares.

CEO Andy Jassy has had a rocky start to his new position, which began in July of this year.

Amazon's stock was the worst performer among Big Tech companies in 2021. It has also has dropped 16% in 2022, joining a general decline in the industry.

Amazon has just reported its slowest rate of growth in any quarter since 2001.

For each share currently owned, the price would decrease from $2,785.58 to $139.28 if the split were to take effect. Additionally, each existing shareholder would receive 19 additional shares for every share currently owned.

Amazon splitting its stock can be a move to help boost its market share. This will provide opportunities for more retail investors to purchase Amazon stock at a price they can afford.

As reported by CNBC, an Amazon spokesperson said, "This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company".

Amazon has split its stock three times before, the most recent of which occurred in 1999 when the company was five years old. If the company's board of directors approves the latest split at a meeting scheduled for May, the new structure will go into effect in early June.

Distributions from the stock split will be made to Amazon shareholders at the close of business on June 3, and trading will begin on a split-adjusted basis on June 6. As of writing, Amazon's stock price is at $ 2,785 at closing.

Why Do Businesses Split Their Stocks?

In most cases, splitting a stock is used as a marketing strategy, with the goal of making a high-priced stock more appealing to retail investors who may be considering investing in it.

Furthermore, it has the potential to make existing investors satisfied by increasing the number of shares they own.

Big Tech Companies That Have Split Their Stocks

Since its initial public offering (IPO) in 1997, Amazon has split its stock four times, including the most recent one. This is the company's first stock split since 1999 when it was a fraction of its current size.

Additionally, on June 2, 1998, it was split in half, on a 2-for-1 basis. On January 5, 1999, it was split on a 3-for-1 basis; and on September 2, 1998, it was split in half again.

As reported, on August 28, 2020, Apple also split its stocks on a 4-for-1 basis. As of today, Apple stock price is at $162.25. In August 2020, Tesla announced a five-for-one split in its stocks. Today, Tesla's stock price is at $ 858.97.

Last month, Google's parent company, Alphabet, announced that it will also split its stocks in a 20-for-1 stock split.

Lastly, in addition to Alphabet and Amazon, Nvidia's stock was split 4-for-1 back in July, and the stock is currently trading at $230.14 per share.