Amazon announced lately to be splitting its shares. The tech giant seems following the footsteps of Google, Tesla and Apple with respect to stocks. However, this is not the first time it is exercising the split. It practiced thrice in the 1990s. Below are some snippets of important facts to know about the Amazon stock split.
A stock split is planned when it is decided to reduce the cost of one unit of the share by making available more shares in the market. The existing shares are chopped. If the split is 5-to-1, it means the 50 million shares will now become 250 million. This means one unit of an existing share will henceforth become five shares.
Amazon is planning to split the stock as 20-to-1. This means the number of issued shares will be increased twenty times. A shareholder will have 20 times more units after the stock split. This means if a shareholder owns 1,000 units of Amazon shares, he will have 20,000 units of the same after the split. However, it is important to note here that the total value will not increase. It is just an increase in the units of shares by 20 times.
The market capitalization of Amazon will remain the same. It will not be changed even though the number of shares in existence will increase by 20 times. This means the value of Amazon will remain unchanged with the split. But shares will become cheaper for investors. One unit will cost less. If one share is worth $2,930 now, a single share will cost just $146.50 after the split. An investor with a capital of $1,000 can buy six shares of the company.
Amazon was founded in July 1994 by Jeff Bezos and was initially named Cadabra, Inc. until 1995 when the company was renamed. It is a multinational tech company and mainly focuses on artificial intelligence, digital streaming, cloud computing and e-commerce.
Bezos founded it in a garage and made an online marketplace for books. Later, he stepped into multiple products. It is now equipped with several subsidiaries including Amazon Lab126, Amazon Web Services, Zoox, Kuiper Sysems, IMDb, Twitch, Whole Foods Market and Ring.
In 2021, Amazon became the largest online retailer in the world and outside of China. It surpassed Walmart. It had more than 200 million subscribers across the world. The key people managing the company now include executive chairman Jeff Bezos and CEO Andy Jassy. Few others to name are former NSA director Keith B. Alexander, Rosalina Brewer, Jamie Gorelick, Judy McGrath, Indra Nooyi, Jon Rubinstein, Thomas O. Ryder, Wendell P. Weeks and Patty Stonesifer.