Amazon shares rallied Monday following the retail giant’s 20-for-1 stock split approved by shareholders last month.
The move, which took shares down from Friday’s closing price of $2,440, is expected to usher in a new crop of investors while rewarding the current holders.
“This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company” Amazon said in a statement shared with FOX Business after the March announcement.
Investors of record on May 27, 2022, will receive 19 additional shares for every one held, the company detailed in a filing with the Securities and Exchange Commission.
Amazon shares have fallen over 26% this year, mired in the stock market selloff that has shaved over 23% off the tech-heavy Nasdaq Composite as investors wrestle with a slowing economy, near-record high inflation against the backdrop of the Federal Reserve’s rate tightening cycle.
“Rising rates are almost always bad for tech stocks, particularly those high multiple future earnings stocks,” said Evercore ISI head of internet research Mark Mahaney during a recent interview with FOX Business.
“Inflation has been a killer for companies like Amazon, if you think at some point inflation will get less worse, then the stock with the most upside in that group is probably Amazon” he explained.
Additionally, Amazon posted its first quarterly loss since 2015 of $3.8 billion or $7.56 per share compared to $8.1 billion, or $15.79 during the same period a year ago.
Amazon is paving the way for other heavyweights also planning stock splits including Google, which announced a 20-for-1 split in February. Its shares closed at $2,290.82 Friday. Tesla, in March, floated the idea after disclosing that its board of directors approved a proposal to enable a stock split in the form of a dividend, contingent on final board approval. Its shares closed at $703.55. And Shopify announced a 10-for-1 split which shareholders will vote on in June. The stock closed at $353.66.