Amazon announces 20-1 stock split!

There’s also a $10 billion repurchase scheme. The split-adjusted basis is scheduled for June 6, pending approval from a shareholder meeting on May 25.

This will be Amazon’s first stock split since 1999 and the fourth since the company’s first public offering in 1997.
That is best news I’ve heard in a long time

I’m interested in what impact stock splits have on everyone here. According to my understanding, it adds no value and merely makes each share cheaper. Is there a benefit to having more claims with a lower value per share?

1 Like

Although stock splits do not immediately add value to the firm, they do improve volume (liquidity), cut option prices (more/easier trading), and, in the case of Amazon, I believe it would make them eligible for the Dow, which would certainly enhance their worth.

2 Likes

A lot of it is due to volume. As a result, higher stock prices often have lower volumes. Splitting it allows for additional mobility and fosters new postures. They also announced it in conjunction with a $10 billion stock repurchase scheme. As a result, they will effectively go from split to buyback (has added benefit of helping on EPS too as buybacks increase the ratio).

1 Like

I like splits, but the broader investing community thinks it doesn’t impact the stock - especially with fractional shares today. What are your opinions on this?

1 Like

In one of my business seminars in college, someone wondered why Company A was more expensive in pricing than Company B, even though Company B was plainly larger. In conclusion, I’m all for lower-priced shares because they make them more accessible to investors. But, yes, I agree that it has no meaningful impact on the firm.