BENGALURU (REUTERS) - Amazon said on Wednesday (March 9) its board had approved a 20-for-1 split of the e-commerce giant's common stock and authorised a US$10 billion (S$13.6 billion) buy-back plan, sending the company's shares up 7 per cent in extended trading.
This is the first stock split by Amazon since 1999 and will give investors 19 additional shares for every share they hold. Trading based on the new share price will begin on June 6.
Amazon's share split is similar to the one announced by Google parent Alphabet last month. Several mega-cap companies such as Apple, Tesla and Nvidia have split their stocks since 2020.
Amazon's share prce has nearly doubled over the last two years, when demand for both its e-commerce and cloud computing businesses surged in the wake of the Covid-19 pandemic.
Stock splits do not fundamentally change anything about the company, other than possibly making the shares accessible to a larger number of investors because of their lower price.
If the split had happened at Wednesday's close, the cost of each Amazon share would have gone from US$2,785.58 to US$139.28.
"This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company," an Amazon spokesman said.
The stock buy-back replaces the previous US$5 billion stock repurchase authorised by Amazon's board in 2016, under which the company had repurchased US$2.12 billion of its shares.
After shares declined about 16 per cent amid a tech rout this year, the company's market capitalisation stood at roughly US$1.4 trillion as at last close.