On late Wednesday, Amazon.com Inc. announced that the company board approved a 20-for-1 stock split, its first divide since 1999.
Accordingly, the e-commerce giant anticipated the split to go into effect on June 6.
Considering its Wednesday close, the cost of each stock would go from $2,785.58 to $139.28. Then, each existing holder would get 19 additional shares for every one they own.
The shares of Amazon benefitted in the wake of the COVID-19 pandemic. Correspondingly, demand for its e-commerce and cloud computing business surged from the shift to remote work.
However, its shares declined 18.27% or 622.51 points amid a tech rout this year. In line with this, the company’s market capitalization stood at roughly $1.40 trillion as of the last close.
Meanwhile, the company also authorized a repurchasing program for $10.00 billion of its stock. This move can help inflate the value of a company’s shares.
Consequently, this act replaces the previous $5.00 billion stock buyback last 2016, repurchasing $2.12 billion of its shares.
Amazon CEO Andy Jassy has faced a rough start to his tenure that started in July. The company was the worst performer among Big Tech companies last year.
Remarkably, its last earnings report posted the slowest growth rate for any quarter since 2001.
Amazon explained that the latest change aims to make the stock more accessible for people looking to invest in the company.
At the same time, it has recently made adjustments to its compensation strategy. Last month, the technology giant increased its maximum base salary for corporate workers to $350,000.
The adjustment significantly edged up from the previous $160,000 as it contends with an increasingly competitive labor market.
Amazon follows Alphabet, Apple, and Tesla
Furthermore, Amazon is the latest highly valued tech company to pull down the price of each share through a split.
Last February, Google parent Alphabet announced a 20-for-2 split. Similarly, iPhone maker Apple has disclosed plans for a 4-for-1 division.
Likewise, leading automaker Tesla has told investors that the firm institutes a 5-for-1 split.
Consequently, Amazon’s move set it up to be more palatable to the price-weighted Dow Industrials. The firm is the world’s most valuable retailer, which is also a major cloud provider.
Additionally, the business expects to win unconditional EU antitrust approval for its $8.50 billion acquisition of movie studio MGM.
This move could ramp up its competition with streaming rivals Netflix and Disney+.
Eventually, the deal would strengthen Amazon’s video streaming service, engaging more subscribers on its platform.