What Was Amazon’s Stock Price Before Its Splits?
Navigate Amazon's stock price history through its splits. Understand how these events redefined share value and historical market data.
Amazon, a prominent technology and e-commerce company, has significantly evolved since its inception as an online bookseller. Becoming a publicly traded entity in 1997 marked a new phase in its growth trajectory. Over its history as a public company, Amazon’s stock has undergone several splits.
Amazon’s Stock Split Timeline
Amazon has executed four stock splits throughout its history. The first split occurred on June 2, 1998, as a 2-for-1 split. Before this event, Amazon’s stock closed at approximately $85.68 per share, and it then opened at about $43.62 per share after the split.
The second split took place on January 5, 1999, with a ratio of 3-for-1. The stock closed around $354.96 per share the day prior to the split, subsequently opening at approximately $109.56 per share. Just months later, on September 2, 1999, Amazon conducted its third split, another 2-for-1. The stock price closed at about $119.06 before this split, with shares opening at approximately $57.50 afterward.
Amazon’s most recent stock split was a 20-for-1 split, effective June 6, 2022. Before this split, Amazon’s share price was trading well above $2,000. Following the split, the shares were revalued to approximately $140 per share, reflecting the 20-for-1 ratio.
What a Stock Split Means
A stock split is a corporate action where a company increases the number of its outstanding shares by dividing each existing share into multiple new shares. While the number of shares increases, the price of each share decreases proportionally, ensuring that the total market value of all shares remains the same immediately after the split. For example, in a 2-for-1 split, one share becomes two shares, each valued at half the original price.
Companies perform stock splits for several strategic reasons. A primary motivation is to make shares more accessible to individual investors. A lower per-share price appears more affordable, encouraging retail participation and increasing the stock’s liquidity.
Another reason for a stock split is the psychological effect of a lower share price. While the company’s underlying value does not change, a lower nominal price per share can make the stock seem more attractive to new investors. This can lead to increased trading volume, further enhancing market liquidity.
How Stock Splits Affect Share Value
When a stock split occurs, an existing shareholder’s total investment value remains unchanged immediately after the event. For instance, if an investor owns 10 shares valued at $100 each for a total of $1,000, a 2-for-1 split would result in them owning 20 shares, each now valued at $50, with their total investment still amounting to $1,000. The split merely divides the existing equity into more pieces.
Historical stock price charts typically display “split-adjusted” prices. This adjustment means that all historical prices are retroactively lowered to reflect the current number of shares outstanding. This allows for a consistent and accurate representation of a stock’s performance over time, as if the current share structure had always been in place.
If one looks at an Amazon stock chart, the prices shown for dates before its splits will appear significantly lower than the actual trading prices at that time. This adjustment is crucial for understanding true percentage gains or losses over long periods, as it accounts for the increased number of shares resulting from splits. A stock split itself does not inherently change the fundamental value or market capitalization of the company; it is primarily an accounting adjustment.