Everyday Power- Amazon to split stocks and buy back shares. What does it mean to investors?
[What's New]
At a time when US markets were recovering, $Amazon(AMZN.US$announced after post-market on Wednesday that it would split shares 20 to 1 and buy back up to $10 billion in shares.
At a time when US markets were recovering, $Amazon(AMZN.US$announced after post-market on Wednesday that it would split shares 20 to 1 and buy back up to $10 billion in shares.
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$Amazon(AMZN.US$ is going to split its stock for the first time in more than 20 years, a period in which its shares have gained more than 3,500% and expects to repurchase $10 billion in shares. It is another large-scale tech giant stock split following $Tesla(TSLA.US$ , $Apple(AAPL.US$ and $Alphabet-C(GOOG.US$. （Google parent Alphabet announced its board approved stock split)
$Amazon(AMZN.US$ is going to split its stock for the first time in more than 20 years, a period in which its shares have gained more than 3,500% and expects to repurchase $10 billion in shares. It is another large-scale tech giant stock split following $Tesla(TSLA.US$ , $Apple(AAPL.US$ and $Alphabet-C(GOOG.US$. （Google parent Alphabet announced its board approved stock split)
$Amazon(AMZN.US$ surged 10.2% in post-market on Mar.09 after the news was released, then fell to 6.62%, with a current market capitalization of $1.4trillion.
[Key Takeways]
Would splits push stock prices higher?
Would splits push stock prices higher?
The stock split will not affect the fundamentals for a long term. However, it could improve the stock's liquidity for a short run. According to the statistics, $Tesla(TSLA.US$, $Apple(AAPL.US$, $NVIDIA(NVDA.US$ stock prices rose 61.04%, 37.35%, 25.3%, and 12.15%, following the previous, respectively, from the announcement to the formal split.
Furthermore, historical data shows that companies that announce stock splits outperform the S&P 500 during the following year.
Since 1980, the S&P 500 member stocks have significantly outperformed the S&P 500 three, six, and 12 months after the first announcement of splitting shares.
In reality, Amazon divided its stock three times before the dotcom bubble in 2000, and the stock has usually been an upward trend in the two decades thereafter.
Some analysts said, $Amazon(AMZN.US$ split might provide it with an opportunity to be added in the Dow Jones Index.
Tesla's stock rose more than 8% in the two following weeks after it was added to the S&P 500.
Amazon's net sales in the fourth quarter of 2021 were $137.4 billion, up 9% year over year, while net profit was $14.3 billion, up 98.6% year over year.
What is a stock split?
A stock split is when a higher-denomination stock is split into many lower-denomination equities. The value of shares owned by investors is unaffected by the stock split. The share price will drop after the split, but the number of shares will rise.
Why stock splits matter?
The corporation decides to split its shares primarily to increase the liquidity of the company's stock, which is common in higher-priced equities. Individual investors find it difficult to enter since the barrier for each hand of such shares is too high, resulting in a smaller shareholder base.
The split enables the company to grow its investor base, attract new investors, and boost trading volume and liquidity. As a result, split shares are frequently seen by the investing public as an indication that the company's management is bullish on the stock price in the future.
More investing basics will be offered in <Everyday Power>. Keep learning to be a master investor.
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sexykountrygurl : Shares of Amazon.com Inc jumped over 5% after the e-commerce giant's share split and buyback moves stand to draw more investors to a stock whose recent performance has been lackluster despite skyrocketing since going public
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bwjx : Those companies growth were high after the stock split because of the bull market. The fundamentals of the company did not change after the split.
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