Amazon Latest Announces 2022:  Amazon Announces 20-for-1 Stock Split and $10 Billion Buyback Plan shares are moving sharply higher in after-hours trading after the e-commerce and cloud-computing giant declared a 20-for-1 stock split and announced an expanded stock-repurchase program

While stock splits don’t mathematically create any value for holders—they’re the financial equivalent of cutting a pie into smaller pieces—retail investors tend to like them, and split announcements often trigger short-term rallies. And, in fact, Amazon shares (ticker: AMZN) are up nearly 7% on the news, at $2,978

Amazon also announced a $10 billion stock-repurchase plan, replacing a previous $5 billion stock-purchase authorization in which it had bought back $2.12 billion of its shares. The program doesn’t have a fixed expiration date

The Amazon split follows an announcement last month that Alphabet (GOOGL) is also splitting its shares 20-for-1, effective July 15. Apple (AAPL) split its stock 4-for-1 in 2020

As with Alphabet, one potential benefit of the Amazon stock split could be the addition of the company’s shares to the Dow Jones Industrial Average

Adding high-priced shares to the Dow is problematic because the index is price weighted—the same percentage move matters more for a high priced stock than a low priced one

So a 1% move in UnitedHealth (UNH), which trades for $486 a share and has the highest price shares in the Dow, carries almost triple the weight in the index as a comparable move in, say, Apple (AAPL) shares, which closed Wednesday at $163

Adding a stock with a price in the four-digit range would instantly give the company the heaviest weighting in the index, and in fact, neither Amazon nor Alphabet are currently included in the index. The splits could change that

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