During his almost 30 years of running AmazonAmazon.com, Jeff Bezos is best known for his increasingly short-term focus on his company's growth and the insistence on maintaining the long-term demands of the investors.
But with his three-year tenure as chief executive ending this summer, investors are betting that new CEO Andy Jassy will be welcoming to their wishes more.including announcing a long-anticipated stock split that would juice shares of the online retailer now hovering around $3,480 per share.
The traders and investors are hoping to get some hints about a potential stock split on Thursday when Amazon releases the first quarter earnings after trading closes.Amazon is anticipating another strong quarter with revenue above $100 billion and profits between $3 billion and $6 billion.Speculation about a stock split, first reported in the week by Amazon, led to a 2.04% increase in shares, one of the biggest spikes in FOX Business stock all year.
I can't quantify the probability of a stock split, but a stock split is bound to happen if not this quarter, next or sometime this year, especially when the stock continues to lag on superior earnings, said Scott Redler, CEO Strategic Officer and founding partner of trading company T 3.The barriers of entry is just not desirable for young investors.In order to get a new investment class in, you need to get liquidity and volume and a stock split would help the average investor get involved for the years ahead.
The biggest impediment in a stock split appears to be Bezos himself.Amazon has split its share three times since going public in 2007.The first was in 1998 when it split 2 for 1.Then it split 3 - for 1 in January 1999 only to have a second split for 2 - for 1 just a month later.Since that time, Bezos has been attracted to not dividing his shares even though he hasn't ruled it out either.
Amazon had no comment from the spokesman of AmazonAmazon.com.
Many investors believe Bezos likes the status symbol of having a stock that trades above $3,470 a share.He is widely considered one of the best CEOs of the modern era, created Amazon in his garage as an online book seller that has morphed into one of the world's largest marketplaces of everything from toilet paper, to movies to NFL games to clothes and a lot more.
The one-time hedge fund manager mismanaged Amazon through the dot com bubble and crash, when its shares languished to high penny stock levels.Today, Amazon is among the world's largest companies with a market value of $1.76 trillion, making Bezos the world's richest man, surpassing Tesla CEO Elon Musk earlier this week with a net worth of over $200 billion, as tracked by Forbes.
Bezos also spread the wealth to both the long-term investors as shares have grown more than 2,670 percent since 2010 compared to a 290 percent increase in the Standard Poor's index of large companies.
Amazon's lofty valuation has kept a price limit on its stock price more recently, which is why many investors are predicting a stock split sometime soon.Investors say Amazon’s stock, which has been traded for nearly four years at $1000 since 2013, is too expensive for many retail buyers to own.That combined with Bezos and his ex-wife MacKenzie selling their stock to fund various charitable interests and side hustles.
Notably, Bezos has created a Space Exploration Company, Red Origin, to rival the billionaire Amazon founder Space-X, putting further downward pressure on Musk's stock for the past nine months, traders say.
A dilution of stock should not impact Amazon's valuation - investors receive more stock and the price reflects this dilution.But if the company does split its shares – as many investors are predicting either now or later in the year — the additional retail buying could augment the company's market valuation overall.
Amazon could also claim bragging rights as a member of the Dow Jones Industrial Average, which currently excludes the company from the popular market because of the popular stock price.Is inclusion in the Dow seen as another incentive to buy the stock, just like it helped Apple attract small investors to buy its shares following a 7 - to 1 stock split in 2014.
Tim Anderson is crazy if they don't split the company, said Amazon CEO Tim Anderson, executive director of TJM Investments.The company could afford to split 10-10 - to 1 and even as high as 15 to one, still be in the high 100s and they would be included in the Dow.