top of page

What happened after the last Amazon Stock Split

As Amazon's stock has recently surpassed $3,600, investors have been wondering if the ecommerce behemoth will announce a stock split. A move like this is intriguing because it reduces the price of a single share. As a result, a wider spectrum of investors can participate. Some investors, for example, may not want to put thousands of dollars into a single stock. (Fractional shares are a possibility, but some brokerages do not provide them.)

Last week, Amazon piqued the interest of investors. A 20-for-1 stock split was declared by the corporation. It will take place in early June if shareholders approve. Will the stock rise as a result? Let's take a look at Amazon's most recent stock split to see what we can learn.

Three stock splits

Stock splits are nothing new for Amazon. In its history, it has carried out three. They haven't been in the company's recent past, however. All of these events took place between 1998 and 1999. The most recent was on September 2, 1999. In the months following the procedure, the stock rose by as much as 75%. However, a look at the stock's performance in the years since the split isn't encouraging. Amazon's stock has dropped from its all-time high. And it took nearly ten years for the stock to actually take off, according to investors.

The good news is that the stock has been steadily rising since then. In fact, since the last split, Amazon's stock has increased by more than 4,700%.

So, would we see a massive boost in the weeks following Amazon's upcoming stock split, only to have to wait many years for more gains? It's hard to know for sure what will happen. However, I am optimistic that Amazon's performance following this new split will pay off sooner rather than later. Why? The company has changed dramatically since 1999, and the outlook for e-commerce has become increasingly positive. Insider Intelligence believes that e-commerce in the United States will hit $1 trillion this year. Prior to the epidemic, which boosted e-commerce, the company predicted that internet buying would reach that level in 2024.

At the time of Amazon's last stock split, several important revenue and profit drivers didn't even exist. For example, Amazon started its Prime subscription program in 2005. By 2020, the service will have surpassed 200 million users worldwide. In 2006, Amazon Web Services (AWS), the company's cloud computing division, was created. Today, Amazon Web Services (AWS) is the industry leader, accounting for 74% of Amazon's operational profits.

Growth prospects

Prime and AWS, of course, have been around for a long. As a result, investors may ask if they can keep growing. I'm optimistic based on what we've seen thus far. Amazon says it added "millions" of Prime members worldwide in its most recent earnings release. The business is also continuing to invest in the program, providing additional services such as Amazon Pharmacy prescription offers. Amazon Prime is boosting its membership cost in the United States at the same time. According to Synergy Research, AWS has maintained its market share of 32 percent to 33 percent over the last many years. With a market share of 21%, it is still far ahead of its nearest competition, Microsoft.

All of this indicates that Amazon will have two major growth engines driving sales and profit in the coming years.

Let's return to the approaching stock split now. Even if the gain isn't as large as the one in 1999, it's realistic to expect an immediate increase after the split. As previously said, a cheaper price may entice additional investors to purchase shares of this burgeoning retail stock. But, even better, Amazon's growth in the next quarters and years, thanks to all it's created thus far, should keep the stock on the rise for a long time.


bottom of page