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: Amazon to split stock for the first time since the dot-com boom, after gains of more than 4,500%

Amazon.com Inc. is going to split its stock for the first time in more than 20 years, a period in which its shares have gained more than 4,500%, and expects to repurchase $10 billion in shares.

Amazon
AMZN,
+2.40%

announced the plans Wednesday afternoon in a filing with the Securities and Exchange Commission, revealing that it expects to split shares 20-to-1, contingent on a shareholder vote at its annual meeting on May 25. Shares have gained 4,579.2% since Amazon last split its stock in 1999, according to Dow Jones Market Data, pushing per-share prices to nearly $2,800. The company plans to execute the split on or about June 3 for shareholders of record as of May 27.

Amazon’s board of directors also approved the largest share repurchase plan in the company’s 25-year history on the public markets. The repurchase approval replaces a $5 billion plan that was established in 2016 and has spent only $2.12 billion on the effort so far, according to the SEC filing.

Shares gained more than 7% in after-hours trading following Wednesday’s announcement.

The stock split could make Amazon more palatable as a possible addition to the blue-chip Dow Jones Industrial Average
DJIA,
+2.00%
,
which avoids companies with high per-share prices. As an example, Apple Inc.
AAPL,
+3.50%

split its shares 7-to-1 in June 2014, pushing per-share prices from more than $600 to less than $100; less than a year later, it was added to the blue-chip index.

“Since the indexes are price-weighted, the Index Committee evaluates stock price when considering a company for inclusion,” S&P Dow Jones Indices, which manages the index, states in its most recent methodology statement for Dow Jones Averages. “The Index Committee monitors whether the highest-priced stock in the index has a price more than 10 times that of the lowest.”

As of Wednesday, Intel Corp.
INTC,
+0.27%

and Walgreens Boots Alliance Inc.
WBA,
+1.37%

had the lowest per-share price of the 30 Dow Jones components, the only two trading lower than $50 a share. The most expensive shares belonged to UnitedHealth Group Inc.
UNH,
+2.56%
,
which were trading for more than $485.

Amazon shares closed Wednesday at $2,785.58 a share. If that price were just evenly divided by 20, the per-share price would drop to about $139.28. Prices could rise before the split, however; Amazon shares gained 5.6% between the announcement of its first stock split on April 27, 1998, and the actual split, which occurred on June 2 of that year, according to Dow Jones Market Data group. After announcing its most recent split on July 21, 1999, shares fell 5.1% ahead of the split on Sept. 1 of that year.

S&P Dow Jones Indices does not rebalance the Dow regularly; the last shake-up was in August 2020, after the latest Apple stock split. At that time, the Dow welcomed Salesforce.com Inc.
CRM,
+5.77%
,
Amgen Inc.
AMGN,
+0.16%

and Honeywell International Inc.
HON,
+1.18%
,
replacing Exxon Mobil Corp.
XOM,
-5.68%
,
Pfizer Inc.
PFE,
+2.76%

and Raytheon Technologies Corp.
RTX,
+3.87%

“The Dow components are reviewed on an as-needed basis. To preserve continuity, changes are rare,” S&P Dow Jones Indices states on its website. “Replacing a stock generally requires a significant change in a constituent company’s core business or a major corporate action, such as an acquisition.”

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