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Walmart is making its stock price more affordable just as it offers its store managers pay raises and annual stock awards. up to $20,000.
The company announced a three-for-one stock split this week that will lower its share price starting at the end of February and make it more affordable for employees (or associates, as the company calls them). The largest private employer in the world has split its shares 11 times since it went public in 1970, but this is the first since 1999.
Walmart is the latest in a group of Fortune 50 companies, including Apple and tesla, to divide its shares in recent years. Although a stock split can often be costly and tedious due to regulations, the maneuver can also help revitalize a stock, especially by attracting more liquidity from smaller investors. In other words, Walmart wants you—yes, you, the day trader who’s been priced out of the stock—to get in on the action.
The president and CEO of the company, David McMillonsaid in a statement which is precisely why he divided the shares, so that more employees could buy full shares, according to the vision of the company’s founder.
“Sam Walton believed it was important to keep our stock price in a range where purchasing whole shares, rather than fractions, was accessible to all of our associates,” McMillon said.
Through the company’s stock purchase plan, eligible employees can purchase Walmart stock with payroll deductions that the company will match at 15% for the first $1,800 per year, it said in a news release.
“Given our growth and our plans for the future, we felt it was a good time to split the stock and encourage our associates to participate in the years to come. As Sam said, “We’re all in this together.” That’s the secret,’” McMillon added.
Although the number of shares outstanding will triple as a result of the split, it will not alter the company’s market capitalization. Walmart shareholders will receive two additional shares for each share they currently own, the company said in a news release.
Due in part to overall stellar stock market performance in 2023 and better than expected December employment numbersretail investor activity has increase. Generation Z investors, who often have less money to trade, could be attracted to Walmart stock following the split. According to an August Bankrate survey nine out of 10 Young investors said they are actively trading, in part to offset inflation.
When contacted for comment, a Walmart spokesperson told Fortune to the public announcement of the company’s stock split.
Walmart shares have jumped about 15% in the last 52 weeks as the company beefed up its online shopping services and announced higher salaries for employees. On Wednesday, Walmart said in a memo to staff that it would be opening 12 stores and turning a smaller location into a supercenter, a sign of imminent growth, the Wall Street Journal reported.
Company shares rose just under half a percent on Wednesday following news of the stock split.
In an attempt to attract and retain employees in a competitive labor market, Walmart has increased starting salary for workers and added new benefits for managers. Earlier this week, the company announced five-figure annual stock awards for store managers, a benefit often given only to higher-level employees. Combined with a higher average salary of $128,000 and the ability to earn double their salary with bonuses, high-performing store managers could earn up to $400,000 by year.
Walmart US CEO John Furner said in a LinkedIn video that being a store manager is much more complicated than in previous years.
“A Walmart store manager runs a multimillion-dollar business and manages hundreds of people. It’s a much more complex job today than when he ran a store,” Furner said.
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