One of the companies in our portfolio, Amazon Inc, has announced a stock split of 20-1 following the steps taken earlier in February by Alphabet (Google’s parent company). The company will also repurchase up to $10 billion of its common stock.
Remember when we wrote about Google’s stock split which is also in our portfolio, we explained that a stock split is when a company divides its shares to lower the price and increases the overall amount of shares available with zero changes to its value.
For example, if you have Amazon shares which are currently worth $2,785.58 as of yesterday’s market close, with the stock split, you’ll have 20 Amazon shares still worth $2785.58, if Amazon board members approve.
Amazon, which has previously split its stocks several times, stated that it is breaking its stocks to ensure that it is more accessible to potential investors and allow employees more flexibility in managing stock-based compensation.
Investors reacted positively following the news yesterday. The e-commerce giant’s shares rose 6.5% after-hours trading yesterday but closed the day at $2,785.58, up 2.4%. The stock as of pre-market trading hours today is up over 4%
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