Amazon plunges as stock split and buyback attract investors

Shares of Amazon.com Inc jumped 6.3% after the e-commerce giant announced a massive stock split, making its equity more attractive to investors following a surge in its value since going public 25 years ago.

The company’s 20-for-1 stock split is its first since 1999 and is in addition to a $10 billion share buyback. It also comes after Alphabet Inc announced a similar split earlier this year.

“Amazon’s proposed stock split speaks volumes about how the world of trading has changed,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

The logo of Amazon is seen at the company’s logistics center in Bretigny-sur-Orge, near Paris, France, December 7, 2021. REUTERS/Gonzalo Fuentes

“While such a move doesn’t mean too much for existing shareholders, it makes individual shares more accessible to everyday investors.”

Amazon’s stock ticker was trending on investor focused social-media site stocktwits.com and was among the most discussed on Reddit’s wallstreetbets, according to sentiment aggregator Swaggystocks.

The Amazon logo is seen outside its JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid./File Photo/File Photo

Shares of Apple Inc and Tesla Inc rallied sharply after their stock splits in 2020, with Tesla eventually joining the S&P 500 by the end of the year.

Amazon’s shares closed near two-year lows at $2,785.58 after soaring over the past two years on booming demand for online shopping during COVID-19 lockdowns.

The company went public in 1997 at an IPO price of $18, or $1.50 adjusted for the stock splits that occurred in 1998 and 1999.

The latest stock split will take effect on June 6.