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New York (CNN Business) --
Amazon stock is about to become 20 times cheaper.
The company announced Wednesday that its board of directors has approved a 20-for-1 stock split, its first split since 1999. If approved by shareholders in May, the split will take effect June 6.
Amazon closed Wednesday at $2,785 a share.
If the stock split were to happen today, Amazon stock would be worth $139 per share.
Don't worry, Amazon shareholders (which is pretty much everyone with a retirement account, these days): your shares will still be worth the same.
They will have 20 times more shares when everything is done.
Companies split their shares for many reasons: Splits can make their shares available to smaller individual investors.
It helps companies gain liquidity and splits can create more demand for a company's shares.
Although deep-pocketed institutional investors don't care about the company's total share price, individual investors may shun high-priced shares.
The growth of zero-fee trading apps, including Robinhood, E-Trade, and others, has made stock splits much more important in recent years.
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Amazon's move may also be aimed at including it in the famed Dow Jones Industrial Average, which tends to include less expensive stocks.
Apple (AAPL), for example, announced a 7-for-1 stock split in 2014 and was listed on the Dow Jones in 2015. The Amazon split is no guarantee that it will be listed on the Dow, but the index might want the largest at .
the world's most valuable retailer, which is also a major cloud provider and media giant.
"This split would give our employees more flexibility in how they manage their capital at Amazon and make the share price more accessible to people looking to invest in the company," Amazon said in a statement.
In case potential shareholders weren't convinced, the company launched another incentive to buy: a $10 billion share buyback program.
That can help inflate a company's stock value by effectively driving the stock offering out of the market.
Shares of Amazon (AMZN) rose 8% in extended trading.
Stock splits of major companies have become very fashionable in recent years.
Apple and Tesla announced splits in 2020. But one company with an alarmingly high share price never split and said it never would: Berkshire Hathaway (BRKA).
At $488,245 a share, Berkshire shares are unaffordable for most individual investors.
That's why it's offering its class B shares, which were split in the past, for $325.
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