As Amazon flirts with $1,000/share, shareholder questions Jeff Bezos about stock split

Bezos in robot
The Method-2 robot’s arms stretch wide with Amazon’s billionaire founder, Jeff Bezos, at the controls. (Jeff Bezos via Twitter)

Amazon stock is close to hitting $1,000 per share for the first time, another indication of the e-commerce giant’s growing strength.

As Amazon trumpeted its 2016 accomplishments at its annual shareholder meeting this week, the company’s stock was surging and on Thursday came within a hair of passing the $1,000 per share threshold. It has sat in the mid $990s throughout the morning Friday.

All this momentum apparently had shareholders thinking about stock splits —issuing more shares to stock owners in proportion to their current holdings. At the meeting, a shareholder of more than 20 years asked CEO Jeff Bezos if the company is considering splitting its stock to give middle class people and younger investors just starting out a chance to buy. Bezos’ answer: not right now.

“That’s something we consider from time to time,” Bezos said at the meeting. “We don’t have any plans to do that at this point, but we will keep looking at it.”

Amazon split its stock three times in a 15-month window, about a year after it went public in 1997 and hasn’t done so since.

Amazon isn’t the only tech giant flirting with $1,000 per share. Google parent Alphabet, which also has a sizable presence in Seattle, is right there with Amazon. 

Most of Amazon’s gains have come in the last two years. It took Amazon 18 years as a public company to reach $500 per share, and just another 22 months to hit $1,000. In 2017 alone, Amazon stock is up more than 32 percent.

Amazon stock in 2017. (Screenshot Via Google Finance)

Several analysts saw this coming. A pair of analysts predicted back in September, when the stock sat at about $780 per share, that Amazon would soon cross the $1,000 threshold, based on the success of the company’s digital brain Alexa and its growing logistics operation. Other Wall Street firms have set Amazon’s target at $1,100 per share.

Not everyone sees blue skies ahead for the company, however. Pacific Crest Securities analyzed Amazon’s latest earnings in a report called “As Good As It Gets (For Now),” and found that increased competition in online retail and cloud computing could blunt Amazon’s momentum in both areas. It laid out two scenarios. Under the rosier situation, all goes well in both areas, and trends toward $1,100 per share.

Under the bearish path, which would see Amazon stock drop to $610, AWS starts to become less of a cash cow as competition catches up. In addition, Amazon wouldn’t see the kind of return it was hoping for from international investments under this scenario.

While $1,000 per share seems like a lot, and it is a huge number for a tech stock, there are plenty of stocks trading at much higher prices. Warren Buffet’s Berkshire Hathaway, for example, trades at close to $250,000 per share. And there are examples in tech as well, such as travel site, which crossed the $1,000 per share threshold back in 2013, and sits at close to $1,900 today.