Amazon Joins Stock Split Trend... $10 Billion Share Buyback Included (Comprehensive)

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Amid major tech companies like Apple and Tesla recently conducting stock splits one after another, Amazon has joined the trend, deciding on a stock split and a large-scale share repurchase on the 9th (local time).

According to CNBC and other broadcasts, Amazon's board of directors approved a 20-for-1 stock split, dividing existing shares into 20, and a $10 billion (approximately 12.4 trillion KRW) share repurchase. The stock split will be approved at the shareholders' meeting on May 25 and the split shares will begin trading on the market from June 6.

This is Amazon's fourth stock split since its IPO in 1997 and the first in 23 years since the dot-com bubble in 1999. The Wall Street Journal (WSJ) reported that Amazon's net sales increased from $1.6 billion in 1999 to $469 billion last year, with market value expanding more than 100 times compared to early 1999. Amazon's stock price has nearly doubled over the past two years amid the COVID-19 pandemic.

Amazon announced, "This split was decided to create a stock price that potential investors can more easily access and to secure greater flexibility for stock-based compensation to employees." Traditionally, Amazon has granted many shares as bonuses, but due to poor performance last year, the stock price did not rise significantly, and there were warning signs in talent acquisition. Accordingly, last month Amazon announced it would raise the base salary for office workers from $160,000 to $350,000. The additional stock split is interpreted as an effort to secure more flexibility in employee compensation.

A stock split divides existing shares at a certain ratio, which does not change the intrinsic value of the company, but lowers the price per share, making it easier for investors to access the stock and generally leading to a rise in stock price. After news of Amazon's stock split and share repurchase, the stock price rose nearly 7% in after-hours trading. It closed regular trading at $2,785.58, up 2.40% from the previous day, and later surpassed $2,980.

Amazon's move aligns with companies like Apple, Tesla, and Alphabet, which previously conducted stock splits. Alphabet announced a 20-for-1 stock split in February, and Apple and Tesla announced 4-for-1 and 5-for-1 splits respectively in 2020. Their stock prices surged afterward. WSJ reported that due to the COVID-19 pandemic, lockdowns, and the expansion of remote work worldwide, tech stocks rose sharply, reviving stock split moves to make stocks more accessible to small investors.

This content was produced with the assistance of AI translation services.