Amazon – buyback and stock split speak volumes

Amazon has authorised a $10bn share buyback, the programme doesn’t have a set deadline. This replaces the previous $5bn programme announced in 2016, of which $2.12bn has been repurchased.

Amazon’s board has also authorised a 20-for-1 stock split. This needs shareholder approval at the Annual Meeting, scheduled to take place on 25 May 2022.

The shares rose 6.6% in after-hours trading.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown

“Amazon’s proposed stock split speaks volumes about how the world of trading has changed. While such a move doesn’t mean too much for existing shareholders, it makes individual shares more accessible to everyday investors. The existential rise of low and zero-fee trading apps means stock-splits are more important than they have been for a while. Of course, Amazon isn’t the first tech name to announce a split in recent times, with fellow corporate giants already having made the decision, including Google parent Alphabet.”

The buyback is another incentive to buy Amazon shares, but its scale may not be what it first appears. The existing $5bn programme has been running since 2016 and only a little over $2bn has been bought back under that initiative. Given the hammering tech stock sentiment has faced in recent months, giving itself permission to buy back huge swathes of its own stock is no bad move by Amazon.”

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