Yet it only took months for Amazon to regain those past heights, necessitating another split. The price-weighted Dow would never be able to let Amazon in without a stock split. Dan Caplinger has been a contract writer for the Motley Fool since 2006. Find out how much you would have made if you invested $100 during Amazon's IPO, including how the power of the stock split affects investment growth. At its annual shareholder meeting, that person asked Bezos whether Amazon would consider splitting its stock in order to let younger investors and those in the middle class have a chance to purchase shares. That was when the stock was nearing the $1,000 mark, though, and another $700 worth of gains hasn't brought the company any closer to making a move. The company's stock split three times—two two-for-one splits in 1998 and 1999, and a three-for-one split in 1999. The first of these two was a three-for-one split. Yet throughout the rise that eventually sent the tech giant toward a $1 trillion market cap, Amazon has never done another split. It was a long path back for the e-commerce giant. In communications with shareholders, he's acknowledged that Amazon looks at the question from time to time, but he has no plans to do a stock split anytime soon. Unfortunately for those who like stock splits, you have to go back to the boom times of the late 1990s to find the last time Amazon decided to split its shares. At more than $1,700 per share at this writing, even a single share of Amazon stock is beyond the reach of many investors. Amazon.com (NASDAQ:AMZN) has done extremely well for its long-term shareholders, with its stock soaring almost 75% in just the past year and having posted fivefold gains since mid-2013. That means your hypothetical original investment of $100 in the IPO would have gone from five to 10 shares. A stock split occurs when a company decides to issue additional shares to current shareholders in accordance with the number of shares already owned. AMZN's market value eclipsed $1 trillion in 2018, and its founder, Jeff Bezos is by far the richest person in the world. Since my January 2018 prediction, Amazon stock is up 101% and on the way to $3,000. To get there by … There's only one strong investing-related reason why the Amazon CEO might change his mind: the opportunity to join the Dow Jones Industrial Average. Amazon.com became one of the first companies to reach $1 trillion in market cap, and it's founder and CEO, Jeff Bezos, is the world's richest person. So a 2:1 split means shareholders have twice the number of shares valued at half the price so the total value of the shares remains stable. The other reason is to make the stock much more liquid and thus increase the number of outstanding shares. Dan Caplinger has been a contract writer for the Motley Fool since 2006. Until the Dow makes its intentions known, though, don't expect to see Amazon split its stock anytime soon. It's not as though Amazon and Bezos are categorically opposed to stock splits. That would yield an increase of more than 129,000% on the initial $100 investment. It's easy to buy a single share of stock from a broker, and some financial institutions even let you buy fractions of a share. Forget TIPS. By the early 2000s, as interest in internet-related stocks waned, Amazon stock saw its price drop into single digits. Amazon's high share price doesn't keep investors from getting into the stock if they want to. Finally, a 10-for-1 split would keep Amazon in the top 10, but its stock would blend in more fluidly with other top components in the Dow. Stock Advisor launched in February of 2002. "That's something we consider from time to time," the CEO said. But in the 20-plus years since its initial public offering (IPO), Amazon stock was not always the hot commodity it is today. Amazon has defied the odds and has arguably been the most successful public company in modern history. An investor who owns 100 shares, for example, ends up with 200 shares. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world. An Amazon stock split makes a lot of sense for those reasons as well as several more. The result at the time was that rather than seeing Amazon's share price vault above $1,000, investors ended up with a total of 12 shares by late 1999 for every one they had owned in early 1998. That's more than 120,000% growth. A 7-for-1 split would be more in line with what some of its tech peers have done more commonly. On the other hand, a 3:1 split means the stock price is reduced to one-third of the original value. Today, Amazon became the second company (following Apple) to cross the one trillion-dollar valuation threshold. CEO Jeff Bezos has historically shown no real interest in doing further stock splits. The rise of Amazon Web Services only accelerated the company's growth, and other initiatives further broadened Amazon's scope to create brand new opportunities for success. Early in its history, when internet stocks were booming in the late 1990s, Amazon made stock splits frequently. Cumulative Growth of a $10,000 Investment in Stock Advisor, The Only Reason Jeff Bezos Would Let Amazon Split Its Stock @themotleyfool #stocks $AMZN, Amazon Is Testing Sea Limited in Its Core Market. Last year, one shareholder called Bezos out on that fact and asked whether he would split Amazon stock in order to do something about it, and the CEO's answer was less than satisfying. While the price of a share is initially reduced by a split, the value—or market capitalization—does not change much. Returns as of 10/15/2020. An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Now, even after its slump, Amazon would still be among the top three Dow components in the recent past. A stock split is when a company divides the existing shares of its stock into multiple new shares to boost the stock's liquidity. Returns as of 10/15/2020. A 2:1 split means shareholders receive an additional share for every share they already own. Remember, that's more than 129,000% on the initial $100 investment. Given his responses to current and would-be shareholders in the past, Bezos shows no inclination to bother making a move without proper inducement in the near future. Forget FAANG. Absent a Dow invitation, Amazon just doesn't look likely ever to do another stock split. The company's stock has reached the four-digit mark, hitting a new high of $2,185.10 per share on Feb. 19, 2020, during intraday trading. The pace of gains accelerated in late 1998 and early 1999, and that prompted a more aggressive 3-for-1 split to knock down a stock price that had climbed above $150. 2. See you at the top! Check out the latest Amazon earnings call transcript. You would now have 324 shares after the stock splits. When Amazon first went public in 1997, its stock was priced at just $18 per share. Those shares would be worth $568,620 at … Amazon stock touched $100 per share in early 1998 and the shares split 2:1 the following June. Invest in the World According to ZARP. Following the company's stellar rise, Amazon saw its stock lose a huge portion of its gains. Yet it's now been almost 20 years since Amazon last split its stock, and with the share price finally seeing some downward pressure after a huge run-up in recent years, some shareholders would love to get the encouraging signal that a stock split would send. The company was founded in 1994 by Jeff Bezos, who originally ran it out of his garage. Finally in 2017, one longtime shareholder spoke up on behalf of those seeking to buy shares of the company. The average stock on the Nasdaq Composite is up 23%. @themotleyfool #stocks $AMZN, share price finally seeing some downward pressure, Amazon Is Testing Sea Limited in Its Core Market. When a company's stock reaches lofty levels like Amazon's stock, it becomes harder for investors to afford, especially new ones. Psychologically appealing. Invest in the World According to ZARP. Bezos' answer was dismissive. So far, though, those investors have been disappointed.

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