Amazon Stock Split: Our Buy Rating Remains
Earnings Announcement and Stock Split
On March 9th, 2022, Amazon (AMZN) announced a plan for a 20-for-1 stock split. The news sent the company's stock price up by 99% after hours. In addition to the stock split, the company also announced a $10 billion share repurchase program.
Bullish Triggers
Both the stock split and the share repurchase program are seen as short-term bullish triggers. A stock split does not add shareholder value, but it can make the stock more affordable for investors. The share repurchase program will reduce the number of shares outstanding, which can boost earnings per share.
Stock Split in Effect
On June 6, 2022, Amazon put the 20-for-1 stock split into effect. The process effectively cut the firm's share price to 1/20th of its previous level.
Buy Rating
We reiterate our Buy rating on Amazon. The company is a leader in e-commerce, cloud computing, and artificial intelligence. We believe that the stock split and share repurchase program are positive developments that should drive shareholder value in the long term.
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