Amazon’s Brush With $1,000 Signals the Death of the Stock Split – Ben Eisen May 26, 2017 5:30 a.m. ET


Stock splits, once considered a way to keep shares affordable for mom-and-pop investors, are rare today as companies aspire to new heights

Amazon.com, which opened its first Amazon Books store in New York on Thursday, has seen its shares brush $1,000. Although the firm split its stock as a young public company, founder and CEO Jeff Bezos said Amazon doesn’t ‘have any plans to do this at this point.’

Amazon.com, which opened its first Amazon Books store in New York on Thursday, has seen its shares brush $1,000. Although the firm split its stock as a young public company, founder and CEO Jeff Bezos said Amazon doesn’t ‘have any plans to do this at this point.’ Photo: Spencer Platt/Getty Images

Big companies are giving up on the stock split.

On Thursday, shares of Amazon.com Inc. AMZN 1.33% almost brushed $1,000 before closing at $993.38.

The price increase, up from around $68 a decade ago, reflects the company’s growth and dominance. But it also marks the latest example of a company letting its stock price rise without engaging in a “split” that boosts the number of shares in order to lower the per-share price. Google parent Alphabet Inc.’s GOOGL 1.46% Class A shares also are now close to $1,000.

Other companies are aspiring to such heights. So far this year, only two S&P 500 companies have split their stock. In all of last year, six companies in the large-company index did. That’s down sharply from 20 years ago, when 93 S&P 500 firms split their shares, a rate of close to two per week, according to Birinyi Associates.

After decades of mostly remaining in a range between $25 and $50, the average stock in the S&P 500 is now trading above $98, the highest ever, according to Birinyi Associates.

A big stock price is “a new way of calling attention to yourself,” said William C. Weld, a finance professor at the University of North Carolina’s Kenan-Flagler Business School who has studied stock splits. It used to be that splitting shares signaled reliability and stability, he said. “Companies now are saying ‘look at us, we’re tough and strong.’ ”

In the 1990s, when stock picking for one’s own account was in vogue, companies also considered splits a way to keep shares affordable for mom-and-pop investors. Even though nothing changes fundamentally about the company with a stock split—it’s like trading a dime for two nickels—splits used to generate excitement and, often, a short-term pop for the shares.

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