Amazon Reveals 20-for-1 Stock Split & $10B Share Buyback; Shares Jump

Facing challenges related to operating costs and employee retention, Amazon.com, Inc. (NASDAQ: AMZN) has joined the bandwagon of other tech companies such as Alphabet Inc. (GOOGL) and Apple Inc. (AAPL), who made their stocks available for mass investors through a stock split.

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The e-commerce company unveiled that its Board of Directors has approved a 20-for-one stock split, pending shareholders’ approval. Remarkably, this is the fourth stock split in the company’s history, the last being in September 1999.

Following investors’ optimism, shares of the e-commerce company jumped 6.6% in the extended trading session on Wednesday.

Stock-Split Details

Per the terms of the split, every shareholder will get 19 additional shares for each share held as of June 3, 2022. The split-adjusted basis trading is expected to commence on June 6, 2022.

Specifically, post-shareholders’ approval, an amendment to the company’s restated Certificate of Incorporation will be enacted, which will include the proportionate increase in the number of shares of authorized common stock. The Annual Meeting of shareholders is expected to occur on May 25, 2022.

Share Repurchase Authorization

In a separate release, Amazon’s Board of Directors has announced a common stock repurchase authorization of up to $10 billion. The new buyback plan replaces the existing $5 billion buyback plan, approved in 2016. The company had already repurchased common stock worth $2.12 billion under the previous scheme.

Wall Street’s Take

Recently, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on Amazon and a price target of $4,655. This indicates a 67.11% upside potential from Wednesday’s closing price of $2,785.58 per share.

Consensus among analysts currently results in a Strong Buy rating, based on 34 unanimous Buys. The average Amazon price target of $4,218.56 implies 51.44% upside potential from current levels. However, shares have lost 8.9% over the past year.

Estimated Monthly Visits

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), offers insight into Amazon’s performance.

According to the tool, the Amazon website recorded a 9.55% decrease in global estimated visits in January compared to the month of December. Also, year-to-date website growth, compared to year-to-date website growth in the previous year, came in at a decline of 21.56%. This, in turn, indicates that the company’s revenues and profitability might disappoint going forward, or at least in comparison to the busy holiday season of the past quarter.

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