Why Is Jeff Bezos Holding Off AMZN Stock Split Despite Record Highs?

amazon stockWhen Will Amazon Stock Split?

As has been said thousands of times before, the key to Amazon.com, Inc. (NASDAQ:AMZN) is its founder: Jeff Bezos. So if you are wondering if an AMZN stock split is around the corner, just take a look at how Bezos runs his firm. Does it seem like something he would do?

The answer is obviously, “No.”

Bezos is unconventional at best, and downright eccentric at worst. His perspective rarely lines up with everyone else’s, so if you are measuring him by what is conventional, you need to stop immediately. Find a different measuring stick.

Just look at his track record: He built an e-commerce empire by tearing apart brick-and-mortar rivals. Yet just as the competition starts to imitate Amazon, he starts investing in physical locations. He bobs when everyone else weaves.

A more startling example of Bezos’s weirdness is how Amazon views profits. Namely, that it doesn’t have any. It’s not like its businesses are unprofitable—”Amazon Web Services” is a cash cow, for instance—but rather that Amazon reinvests all its money into new business lines.

So I don’t expect Bezos to touch AMZN stock even if it climbs to $1,500, $2,000, or $3,000.

It’s just not his style.

Also Read:

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AMZN Stock Split History

Before you scroll to the comments section to remind me of Bezos’s past with stock splits, give me a chance to clear the air. Yes, Amazon has split its stock before.

In 1999.

The last time Amazon split its stock, Cher was No. 1 on the billboard charts and Blue Streak was the top grossing movie in America. It was a very different world.

Here’s a full account of the Amazon stock split history:

Amazon Stock Split History Split Ratio
1998 2-for-1
1999 (January) 3-for-1
1999 (September) 2-for-1

Keep in mind that the U.S. tech sector was responsible for a massive stock market crash less than a year after these splits took place. Bezos could have been shaking off what he considered unearned gains in Amazon’s share price.

Even if you don’t buy that particular argument, it’s hard to untangle the stock split from the dot-com crash. There was far too much “irrational exuberance” for my liking.

Nevertheless, Amazon moved on, conquering markets as it went. Bezos restrained from splitting the stock as it broke new highs. In the last five years, he has also restrained from buying back stock. All new money goes to new products.

It would appear that Bezos is letting AMZN stock run its course. His laissez-faire attitude with the share price reminds me of another billionaire: Warren Buffett. You may have heard of him.

How Is Jeff Bezos Like Warren Buffett?

Buffett’s investment firm-turned-conglomerate is a case study in not caring about splits.

Rather than manipulating investors’ perceptions with financial trickery, Buffett let shares of Berkshire Hathaway Inc. (NYSE:BRK.A) run towards the heavens. Each full share is now worth $255,860. Let that sink in for a moment. $255,860 per share.

jeff bezos amazon
Photo Credit: flickr.com/photos/jurvetson/5129303018

Buffett never felt the need to split the stock, although fractions of the shares did start trading under a separate ticker symbol.

My guess is that Bezos will show similar restraint. His focus is (and always has been) on delivering greater value to customers, not on psychological games with investors.

Besides, Amazon already took the market by surprise by acquiring Whole Foods Markets, Inc. (NASDAQ:WFM). It was a positive surprise, to be sure, but there’s only so much a company can confound expectations before uncertainty creeps into its valuation.

Uncertainty is not what Bezos wants. Based on the last 18 years of his tenure, it is clear that he just wants to build out the business in a straightforward manner.

I wouldn’t expect an AMZN stock split any time soon.