Don’t worry, Amazon stockholders (which is pretty much everyone with a retirement account, these days) — your stakes will still be worth the same. You’ll be holding 20 times more shares when all is said and done.
Companies split their stocks for numerous reasons: Splits can put their stock within the reach of smaller, individual investors. It helps companies gain liquidity and splits can create more demand for a company’s stock.
Although deep-pocketed institutional investors don’t care about the company’s overall stock price, individual investors might be turned off by high-priced shares. The growth of zero-fee trading apps, including Robinhood, E-Trade and others, have made stock splits much more important in recent years.
“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.
In case potential shareholders weren’t convinced, the company threw in another incentive to buy: a repurchasing program for $10 billion of its stock. That can help inflate the value of a company’s shares by effectively pulling the supply of stock out of the market.
At $488,245 a share, Berkshire shares are unapproachable for most individual investors. That’s why it offers its B-class shares, which have split in the past, for $325.
