Don’t worry, Amazon stockholders (which is pretty much everyone with a retirement account these days) — your bets will still be worth the same. you will hold 20 times More Share when all is said and done.
Companies split their shares for several reasons: Splits can put their stock within reach of smaller, individual investors. This helps companies gain liquidity and the split can create more demand for the company’s stock.
Although institutional investors with deep pockets may not care about the overall stock price of the company, individual investors may be put off by higher priced stocks. The growth of zero-fee trading apps, including Robinhood, E-Trade, and others, has made stock splits more important in recent years.
“This divestiture will give our employees more flexibility in managing their equity in Amazon and making the share price more accessible to those looking to invest in the company,” Amazon said in a statement.
If potential shareholders weren’t convinced, the company offered another incentive to buy: a repurchase program for $10 billion of its stock. This can help increase the value of a company’s shares by effectively pulling the stock’s supply from the market.
At $488,245 per share, Berkshire’s shares are unaffordable to most individual investors. That’s why it offers its B-class shares, which have been split in the past, for $325.