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Amazon stock surged by more than 5% in morning trading on Thursday after the online retailer announced that it would reward investors by giving them 20 shares of the company for each share they own.
The Seattle-based firm also announced that its board has authorized a stock buy back of up to $10 billion worth of shares.
Stock splits boost the number of shares in a company while decreasing the value of each individual share. They are normally initiated after a large run up in the share price.
Amazon hopes the 20-for-1 split will make the company’s stock more attractive to a larger pool of investors.
Other tech giants like Alphabet Inc. and Apple have also split their stocks in recent years. Google’s parent company is considering a plan for a similar 20-for-1 stock split.
Tesla, the electric car maker, is planning a 5-for-1 split.
The last time Amazon split its stock was more than 20 years ago, when it did so three times after the company first went public in 1997.
Amazon released a statement saying the move would give employees “more flexibility in how they manage their equity” while making the stock “more accessible” for retail investors.
The stock split is still subject to approval by shareholders. If it is given the green light, it would take effect in June.
Amazon has undergone a period of change in the last year. Andy Jassy replaced Jeff Bezos as company CEO in July.
The company’s stock has not fared well so far this year, falling 16%. Amazon also reported its slowest rate of growth for any quarter since 2001.
Like other companies, Amazon is grappling with supply chain disruptions and post-pandemic economic turbulence exacerbated by record rates of inflation and the Russian invasion of Ukraine.
Amazon has also been looking to lure workers amid a labor shortage by offering corporate workers a maximum base salary of $350,000 — a substantial increase from $160,000.
The company has normally offered potential new hires a package of shares, but the underperforming stock has forced it to explore other avenues.
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