Through the course of this artcile, we will undertsand all about the Amazon stock split and the scheduled date for this Amazon stock split.
Amazon.com Inc. (AMZN) is one of the world’s largest organizations and a leader in e-commerce and cloud technology. The organization runs an online marketplace that sells everything from electronics to clothes to furniture to food to toys, among other things.
It also offers streaming music and movie services. Businesses can use Amazon’s cloud services platform to build, deploy, and manage web applications for various reasons.
When Amazon was formed in 1994, it began as an online bookstore. Jeff Bezos, Amazon’s founder and former CEO saw the company as more than just an online store. On the other side, Bezos saw Amazon as a technology company whose competitive advantage was making online payments more convenient for customers.
Three years later, in May 1997, Amazon went public through an initial public offering (IPO). Its stock is traded on the Nasdaq Global Select Market.
The headquarters of Amazon are located in Seattle, Washington, and Arlington, Virginia. In July 2021, Andy Jassy succeeded Jeff Bezos as CEO of the e-commerce giant. Amazon is classified as a member of the consumer discretionary sector.
However, the company has used its technological prowess to rapidly expand into new industries, such as cloud computing, where Amazon Web Services (AWS) is the leading supplier.
Walmart Inc. (WMT), eBay Inc. (EBAY), and cloud computing services opponents Microsoft Corp. (MSFT) and Google Cloud parent Alphabet Inc. are some of the company’s main competitors (GOOGL). Amazon earned $21.3 billion on net sales of $386.1 billion in the fiscal year that ended on December 31, 2021.
What Does It Mean When Amazon Splits Its Stock?
On March 9, 2022, Amazon’s board of directors approved a 20-for-1 stock split as well as a stock repurchase program worth up to $10 billion for an undefined period. So at the annual shareholders meeting on May 25, shareholders must authorize the Split.
If approved, the additional shares will be distributed on or around June 3, 2022, to all shareholders of record as of May 27, 2022. If shareholders consent, this will be Amazon’s first stock split since 1999 and just the company’s fourth since its initial public offering (IPO) in 1997, which would be uncommon if they don’t.
This is definitely part of a growing trend of major corporations splitting their equity to make their stock more accessible to individual investors. Alphabet’s board of directors approved a 20-for-1 stock split in February 2022, while Apple and Tesla confirmed stock splits in mid-2020.
On September 13, 2021, Karl Racine, the attorney general for the District of Colombia, filed an updated antitrust suit against Amazon, focused on the company’s ties with wholesale suppliers.
How Many Times Has Amazon Stock Split?
Amazon’s stock has been split three times, with a 20-for-1 split set for June 3, 2022, pending shareholder approval at a meeting on May 25, 2022.
- The following are the three times Amazon’s shares have been divided: • On September 1, 1999, Amazon’s common shares were split 2-for-1.
- On January 5, 1999, common shares were split three for one.
- On June 2, 1998, common shares were split 2-for-1.
Is It A Good Idea To Buy A Stock Before It Splits?
Stock splits, of all, do not affect the company’s value; they simply split shares into smaller, more manageable bits. However, they make it much easier for smaller stockholders who don’t have $3,000 to invest in the stock to buy it.
Despite the arrival of brokerages that offer fractional shares, many small investors still maintain brokerage accounts that do not offer fractional shares. As a result, the Split may impact a stock’s liquidity and options behavior.
Some CEOs despise the increased liquidity that comes with a lower stock price. Berkshire Hathaway (BRK.A 2.14 % ) (BRK.B 2.16 % ) shares, which currently sell for $488,245 per Class A share, have never been split!
Buffett didn’t want to attract short-term speculators looking for a quick buck, and more liquid, lower-priced equities tend to make larger up-and-down fluctuations as a result of higher trading activity.
Berkshire was forced to offer lower-priced Class B shares in 1996 to avoid the establishment of investment trusts that would allow smaller investors to hold a “piece” of Berkshire for a fee.
Following the early 2000s dot-com bust, Jeff Bezos obviously took a page from Warren Buffett’s playbook, never splitting Amazon’s stock again since it plummeted by more than 90%.
So, why is an Amazon stock split taking place right now?
Since the last Split, Amazon’s stock has certainly performed well. However, as the stock’s price rose over $3,000, it hit a snag, particularly when compared to other high-profile tech stocks that had split in the previous two years.
Could the underperformance of Amazon’s stock split be attributable to a lack of liquidity? It’s impossible to say, but it’s possible that Amazon employees are dissatisfied with its recent performance (many of whom are paid in Amazon stock).
Amazon has more than doubled its personnel since the pandemic began and is competing for top tech talent all over the world, so a drop in its stock price could hamper its ability to hire top programmers.
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Don’t Buy Amazon for the Split
While many people consider Amazon to be an uncontrollable growth stock, investors should not underestimate the company’s ability to deploy resources.
Investors should buy the stock more than the stock split since it appears to be undervalued based on its aspects, and management appears to concur. Amazon also hires a lot of smart people.
The fact that Amazon is repurchasing shares extensively is telling. Under Bezos, Amazon tried to spend as much money as possible on growth initiatives. Thus, the fact that management is expanding share repurchases shows that the company believes its stock is undervalued.
Amazon has gone through a huge two-year investment cycle since COVID-19, but that should be reducing now as growth trends stabilize. Therefore as Amazon decreases its investment in extending its fulfillment network, which has more than doubled since the pandemic began, free cash flow should jump this year.
Amazon has previously repurchased stock, but only in small amounts. The most recent repurchase occurred towards the end of 2011 and the beginning of 2012 when the stock had fallen over 25%. This is similar to the recent collapse in stock prices.
Investors would have done well to follow management at the time, as Amazon’s stock began to rise dramatically in late 2012 and beyond.
Amazon Stock Split 2022
Amazon is planning a stock split in 2022.
As per the SEC filing, Amazon stockholders will vote on the stock split during the company’s annual meeting in May, and the Split is expected to go into effect in early June, pending the shareholders’ approval. If the price rises due to the Split, I hope management spends a large portion of the $10 billion share repurchase program before then.
After a dismal year and a half, Amazon investors may be in for a much better year in 2022. It’s a blazing buy with the Amazon stock split on the way.
What are your thoughts on the Amazon stock split, which is set to take place in the middle of 2022? Use the comment box to express your thoughts and ideas.