Shares of Amazon (NASDAQ:AMZN) jumped as much 7%, or $195, to $2,980 in today’s extended trading, after the company announced that the Board of Directors has approved a 20-for-1 stock split.
The e-commerce giant also said it plans to buy back up to $10 billion worth of its shares.
Stock splits are written as a ratio of the new shares to old shares. According to CNBC, were the split to happen as of Wednesday’s close, the ticker’s cost per share would be significantly more affordable for investors to buy as it would go from $2,785.58 to $139.28, giving each existing AMZN shareholder 19 additional shares for every one they own.
Stock splits are a great way to increase the number of outstanding shares without diluting shareholder ownership percentage.
The shares will be distributed to Amazon shareholders at the close of business on June 3, and trading will begin on a split-adjusted basis on June 6.
This is Amazon’s first stock split since 1999, and its third since the company went public in 1997.
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