Could a new CEO deliver a long-awaited stock split?
(ticker: AMZN), whose stock ended Monday at $3,699.82, up 1.2%, has not split its shares since 1999 and now has the second-highest share in the world.
S&P 500 index,
behind only house builder
(NVR) for $5,040.
Amazon veteran Andy Jassy took over as CEO from founder Jeff Bezos, who remains chairman, in early July. Bezos is the largest shareholder, with effective control over the e-commerce and cloud computing giant.
Another high-profile split candidate is Google parent
whose shares, measured by its non-voting shares (GOOG), are up 58% this year to $2,792.89. Alphabet will announce the results for the second quarter on Tuesday.
Bezos probably wasn’t interested in splitting the stock or it would have happened. The company will release its second quarter results on Thursday.
Mark Mahaney, an Evercore ISI analyst, doesn’t think there will be an Amazon or Alphabet split anytime soon Barron’s in an email that he has not heard either company discuss the idea.
Mahaney is more focused on a possible dividend at Alphabet, which pays none, and on share buybacks at Amazon, the only one of the five major tech companies that has not repurchased shares in recent years. The other four are
(MSFT), alphabet and
(FB). He thinks both an Alphabet dividend and a large Amazon buyback are good opportunities for the next two to three years. Amazon’s net cash position, now over $40 billion, is expected to grow in the coming years.
Many retail investors would like to see an Amazon split of at least 10 for one to make the stock more affordable. Many individual investors don’t have the nearly $3,700 for a single Amazon stock or won’t buy Amazon because it would be too much of their portfolios at its current price.
(SCHW) offers fractional shares of Amazon and other stocks in the S&P 500 through a product called Stock Slices, but not all brokerage firms have a similar product.
A split could also be a favorable indicator for management, a view echoed by Gary Black, a former CEO of Janus and Aegon Asset Management US with a Twitter following of more than 81,000, aided by his take on Tesla (TSLA) . Black’s view is that a split could be a bullish signal from corporate brass.
Alphabet has not split its shares since 2014, when it distributed non-voting shares (GOOG) as a dividend to both voting rights holders (GOOGL) and regulated shares, which are largely owned by founders Larry Page and Sergey Brin. The distribution amounted to a stock split.
A stock split by Amazon or Alphabet could pave the way for inclusion in the Dow Jones Industrial Average. The Dow has an old-fashioned price weighting, which means that high prices predominate.
(UNH), with the highest price of the 30 Dow components at $413.72, according to S&P Dow Jones Indices has the largest weighting of the index at nearly 8%.
Amazon and Alphabet would overwhelm the other Dow components based on their current prices. It would probably take at least a 10-to-one split of both companies to qualify for Dow.
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