On Wednesday, its board approved its first stock split since 1999. If approved in May, the split will take effect July 6. This, in short, would make Amazon shares cheaper. With this division, each share will go from costing US$2,785.58, according to its value at yesterday’s close, to US$139.28.
“Pending shareholder approval of the amendment, each registered shareholder of the Company (Amazon) will have, at the close of business on May 27, 2022, an additional 19 shares for each share held thereafter. date and that will be reflected in their accounts on or around June 3, 2022,” reads the statement collected by EFE.
In turn, the company will repurchase 10,000 million dollars in shares with the aim of “increasing long-term value for shareholders”
Why do companies split their shares?
The divisions can make their shares available to retail investors. It helps companies to gain more liquidity and the divisions can create more demand for the company’s shares. Although institutional investors do not care about the total price of the shares, individual investors reject high prices.
Amazon’s move may be related to its goal of inclusion in the Dow Jones Industrial Average, which tends to include less expensive stocks. “This split would give our employees more flexibility in how they manage their capital at Amazon and make the share price more accessible to people looking to invest in the company,” Amazon said in a statement.
Source: Ambito
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