Amazon is preparing for a stock split

Amazon Inc. (AMZN) announced its intention to split its own shares 1 to 20. This means that the new value of the shares will be about $150. For over twenty years, Amazon has not held a stock split, as its founder Jeff Bezos did not consider it an important part of the business strategy. However, the new management approaches the company’s development differently and focuses on returning money to shareholders.

Amazon has announced that the split will take place in early June 2022 at a ratio of 1 to 20. Recall that the current stock price of the companies is about $ 3,000. This means that the cost of one share can be about $150. Most likely, the new price will lead to increased demand for the online retailer’s securities: shareholders who previously had no access to Amazon shares will enter the market. In addition, Amazon management announced a $10 billion share buyback soon.

This amount is less than 1% of the company’s market capitalization, however, the very fact of returning money to shareholders may be evidence of Amazon’s readiness to switch to paying dividends in the medium term. The possibility of including Amazon shares in the Dow Jones index is also being discussed. Analysts on Wall Street have repeatedly drawn attention to the fact that the absence of such a blood company as an Amazon in the DJI industrial index does not reflect the general situation in the market.

After the stock split, the online retailer may take 12th place in the Dow Jones index. The news about Amazon’s intentions to split shares and return money to shareholders supported the growth of shares last week. However, this increase was not enough to restore the shares, at least to the level of February. At the auction on March 14, AMZN’s stock was worth $2,910.49, which is 12% lower than at the beginning of the year.