Amazon Stock News and Forecast: AMZN shares jump over 5% to near $3,000 on planned 20-for-1 split
- AMZN stock rose over 5% to close in on the $3,000 mark on Thursday.
- Amazon announced a historic 20-for-1 stock split, which should make shares attainable for retail crowd.
- Management announced a new $10 billion share buyback program.
Update: Amazon stock price extended its rebound into the third day on Thursday, having risen 5.41% on the day. Despite the upbeat momentum, Amazon buyers fell short of the $3,000 barrier, as the shares ended the day at $2,936. The stock price reached the highest level in five days after the company announced plans to split its stock by 20-for-1 for the first time since 1999. The company added that it will buy back up to $10 billion worth of additional stock. Amazon shares rocketed even though the Nasdaq Composite lost 0.95% on broad risk-aversion, spurred by the Russia-Ukraine failed peace talks.
Amazon (AMZN) stock spiked as much as 10% in the after-hours trade on Wednesday after the company announced a 20-for-1 stock split. On Thursday, the premarket spike has subsided somewhat to 6% at $2,955. In addition to the stock split, management agreed to a $10 billion share buyback program.
Amazon Stock News: Splits and buybacks
This will be Amazon's first stock split since 1999. It will need to be approved at the company's shareholder meeting on May 25. The split-adjusted price would not begin on the present schedule until June 6.
"This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company," an Amazon spokesperson said.
It is thought that reducing the share price close to $150 will make it easier for retail traders to invest and thus provide a better base to the market cap. AMZN shares have fallen 26% from their 52-week high and 18% year to date.
The $10 billion share buyback policy may not hearten savvy investors all that much, since Amazon's previous $5 billion buyback authorization in 2016 only managed to retire $2.12 billion worth of shares. The new program replaces rather than adds to the existing program. Like that previous policy, the new program also lacks an expiration date, making it less likely that the full extent of the target will be reached.
AMZN stock key statistics
| Market Cap | $1.4 trillion |
| Price/Earnings | 43 |
| Price/Sales | 3 |
| Price/Book | 10 |
| Enterprise Value | $1.4 trillion |
| Operating Margin | 5% |
| Profit Margin |
7% |
| 52-week high | $3,773.08 |
| 52-week low | $2,671.45 |
| Short Interest | 1% |
| Average Wall Street Rating and Price Target | Buy, $4,100 |
Amazon Stock Forecast: $3,090 is the key level
Only two days ago on March 8, AMZN hit a new range low at $2,671. Some may be tempted to see this as the second part of a double-bottom sequence with the January 24 crash, but that session saw a low of $2,708, which seems too distant from March 8's level. AMZN stock is still at the mercy of the war in Ukraine and related oil price growth. High oil prices can greatly hurt a retail giant like Amazon that relies on it for transportation. Higher oil prices could also translate into higher product prices and lower consumer spending in the near term.
The AMZN share price is greatly reliant at this time on the macro environment and news front. That said, as AMZN nears $3,000, traders will not be sure that a true reversal is in motion until shares surpass $3,090. AMZN price did make it above $3,092 briefly in the after-hours trade on Wednesday. This price level offered resistance late last month as well, and the 50-day moving average is just above here at $3,100. Above $3,090, AMZN is in neutral territory.
Above $3,175, which served as support in June, August, and October of 2021, Amazon stock is in bullish territory. Support can be found at $2,708 or thereabouts.
AMZN 1-day chart
Previous updates
Update: Amazon stock has risen 5% at the start of Thursday's session to $2,925. This is, of course, in relation to ecommerce mega cap's decision to offer a 1-for-20 share split that will be more affordable to the retail crowd. The price rise is somewhat down from the premarket and afterhours market on Wednesday night, which saw the share price rise between 6% to 10%. The Nasdaq is down more than 1.4% at the moment after Russian and Ukrainian interlocutors ended peace talks after just 90 minutes. This signals to the market that the war in Ukraine and drastic sanctions may continue to scale and thus put pressure on commodity prices like oil that are a drag on the stock market.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
