It’s the first split since 1999 and the fourth since Amazon’s IPO in 1997. The
company also said its board has authorized Amazon to buy back up to $10 billion
worth of shares
The tech giant announced its first stock split since the dot-com boom, telling
investors on Wednesday that they’ll receive 20 shares for each share they currently
own. The stock soared 6% in extended trading.
A stock split is when a company increases the number of its outsanding shares to
boost the stock's liquidity. Although the number of shares outstanding increases by a
specific multiple, the share price drops in proportion to that multiple, because the
split does not make the company more valuable.
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It does not fundamentally change anything about the company, other than possibly
making the shares accessible to a larger number of investors because of their
cheaper price.
This is Amazon’s fourth stock split since its IPO in 1997, and its first since 1999,
when the company was a fraction of its current size. It also split on a two-for-one
basis on June 2, 1998; a three-for-one basis on Jan. 5, 1999; and a two-for-one
basis on Sept. 2, 1999.
Amazon shares are up over 4,300% since the last split was announced.
