About Amazon’s 20-for-1 Stock Split
Amazon shareholders voted to approve a 20-for-1 stock split at the company’s annual shareholder meeting, held on May 25, 2022. This was Amazon’s first stock split since 1999 and fourth since the company IPOed in 1997.
Stock splits issue additional shares to shareholders. With more shares issued, the price per share will reflect a lower amount. Importantly, while stock splits reduce the price per share, they do not intrinsically impact the stock’s value.
What does this mean for Amazon shareholders?
If you own 1 share of Amazon stock, following a 20-to-1 stock split you would gain an additional 19 shares at a new share price that is lower than the previous price per share. As an investor, following the split, you’d own 20 total shares versus 1, with the total value of your shares remaining unchanged.
For example: Say you own 1 share of Company X at a current price per share of $1,000. Following a 20-to-1 stock split, you would own 20 shares of Company X at a price per share of $50. The total value reflects the same amount you started with, but you now own more total shares.
If you own a fraction of a share, the same math applies. For example, if you own 0.25 of one share of stock (priced at $250), you will now own 5 total shares priced at $50 per share, with the same total value being $250.
Please note that the 5-day view of your Amazon investment within your Portfolio will not be available from June 6 through June 10.
Why do companies split their stock?
Stock splits are designed to make the cost per share for investors more affordable by increasing the number of shares and lowering the price per share. Stock splits had a greater impact on retail investor affordability prior to the advent of fractional shares because they made the price per one share of stock for expensive stocks more accessible for the average investor.
Amazon notes that the June 3 stock split will specifically help employees have greater flexibility when managing their Amazon equity.
You can learn more about stock splits here.
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