Amazon Announces Double Package: Share Split and Buyback in One

Amazon.com Inc (AMZN: US) announced a 20-for-1 split of its common stock, accompanied by a $10 billion buyback program, dated March 9, 2022. The Split program is the Amazons’ fourth since its entry into the stock market in 1997.

Interestingly, Amazon is not the first company to decide upon a share split. It’s following this trend initially set by big guns in the market like Alphabet Inc. (GOOGL: US) and Tesla (TSLA: US).

Why the Split?

A share split seems like a recipe to further the company’s value among current and prospective investors.

Likewise, while this split will not cut down the figures in Amazon’s Market Capitalization, present owners of $AMZN shares will receive 20 shares for every 1 share that they own. This is also a green flag for investors planning to own $AMZN stock themselves. The stock split would drive down the stock’s current price, making it more affordable.

On the other hand, the $10 billion worth repurchase would mean Amazon’s biggest buyback in the company’s history.

The day before both announcements - March 8, 2022 - the price closed at $2,720.29. On March 10, 2022, two days later, the price shot up to $2,936.35, marking an increase of almost 7.94%. So far, it seems that the two programs have passed the first test to raise $AMZN’s value. This was crucial considering that the stock began 2022 with a price of $3,408.09 and has since fallen by almost 13.84%.

What Else Is on the Menu?

Previously, Amazon showcased its earnings report for the fourth quarter of and full-year 2021. The company’s Net Sales amounted to $469.8 billion; a result that was 22% higher than the sales in 2020. For the ongoing Q1 of 2022, the report stated that it hopes to see a 3% to 8% increase compared to the net sales for Q1 of 2021.

On March 2, 2022, the company divulged plans to close down 68 of its standing bookstores in the United States as well as the United Kingdom. This move comes as a plot twist in the story of Amazon, which started off as an online bookseller to the masses in 1995. About the closing, the online seller stated that it’s transferring focus to Amazon Fresh, Amazon Style Stores among others.

On top of this, Amazon also suspended its services in Russia, from shipping retail items to access to Prime Video on March 9, 2022

Closing of stores and stopping services could mean the pulling of plugs on several jobs and employees for the company. But considering Amazon’s other ventures, there is still a tinge of hope that the company’s stature would go higher.

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