Amazon $AMZN Stock Up 9% On $10B Buyback Hype, 20-1 Split

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AMZN stock rose 9% on March 9, 2022, after the company announced a 20-to-1 stock split and $10 billion share buyback.

Amazon.com board authorizes 20-for-1 stock split

In a regulatory filing, the board of directors of Amazon approved a 20-for-1 split of the company’s common stock to be effected through an amendment to the company’s Restated Certificate of Incorporation. The 20-for-1 split will set the stock price at around $150 per share, making the stock more affordable for smaller, retail investors.

The Amendment will also effect a proportionate increase in the number of shares of authorized common stock. The stock split and the proportionate authorized share increase are subject to shareholder approval of the Amendment at the 2022 Annual Meeting of Shareholders, which is currently scheduled to take place on May 25, 2022. The company’s definitive proxy statement relating to the Annual Meeting will include additional details regarding the Amendment.

Amazon board authorizes repurchase of up to $10B of common stock

In a regulatory filing, on March 9, 2022, the Board of Directors of Amazon authorized the company to repurchase up to $10B of the company’s common stock. The program allows the company to repurchase its shares opportunistically from time to time when it believes that doing so would enhance long-term shareholder value. The repurchase authorization does not have a fixed expiration. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing. This stock repurchase authorization replaces the previous $5B stock repurchase authorization, approved by the Board of Directors in 2016, under which the company had repurchased $2.12B of its shares.

Smoke and Mirrors Share Buyback for Amazon

The idea seems to be to use market engineering to raise money for Amazon. In essence, Amazon is diluting their stock via a 20-for-1 split, but then buying some of the stock back. Consider that back in 2016, an entire 6 years ago, Amazon only purchased less than half of the announced $5B stock repurchase. At that rate, it would take Amazon 24 years to purchase $10 billion of it stock. The announcement hype seems to always be bigger than the actual amount bought back. But don’t let reality get in the way of a good hyped share buyback headline.

📺 AMAZON 20 to 1 SPLIT!!! AMZN STOCK 10 BILLION STOCK BUY BACK!!!

AMAZON 20 to 1 SPLIT!!!  AMZN STOCK 10 BILLION STOCK BUY BACK!!!

📉 AMZN Stock Technical Analysis

Amzn Stock

The short-term trend is negative, as is the long-term trend. Prices have been falling strongly lately, it is better to avoid new long positions here.

There is support at 2785.57 from a horizontal line in the weekly time frame. There is also support at 2720.29 from a horizontal line in the daily time frame.

There is a resistance zone ranging from 3013.73 to 3086.49. This zone is formed by a combination of multiple trend lines and important moving averages in multiple time frames. There is also resistance at 3327.59 from a horizontal line in the daily time frame. Finally, there is a resistance zone ranging from 3719.34 to 3731.41. This zone is formed by a combination of multiple trend lines in multiple time frames.

The technical rating of AMZN is bad and it also does not present a quality setup at the moment. AMZN stock has a Setup Rating of 3 out of 10. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when AMZN stock consolidates and has a Setup Rating of 8 or higher.

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