Google Inc (GOOG) (GOOGL) Stock Split: What It Means For Investors

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Google Inc (GOOG) (GOOGL) Stock Split: What It Means For Investors
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Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) stock was split last Thursday as announced by the company back in January. After the split, there are now two classes of shares with tickers GOOG and GOOGL.  Last October, the stock of the search engine giant surged to as much as $1,000 for the first time.

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Google stock split: All you need to know

Unlike other stock splits where two classes of shares are available at a lower price after the split, Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s split differentiated in terms of voting rights. This will also allow founders Larry Page, Sergey Brin and executive chairman Eric Schmidt to retain control over the company.

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GOOG is the ticker for Class C shares and GOOGL is the name given to Class A shares. There will be no voting rights for Class C shares, whereas Class A shares carry one vote. Those who had Google stock in their portfolio before the split were given one Class A share that has voting rights.

Class B shares of Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) do not trade on a public market, and carry 10 votes for every share. It is worth noting that when a Class C share is sold by the company, it converts one class B share into a Class A share.

Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) will pay appropriate compensation to the non-voting GOOG stock investors in a year if there is a considerable difference between the prices of two classes.

What happens after the split

Dan Ritter of Wall St. Cheat Sheet said that nothing much has changed after the stock split.

“This may sound like a somewhat contrived way for executives to maintain control of the company, and it kind of is, but this is fine.” He added that a bet on Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) stock means trust on Brin, Page and Schmidt. According to Ritter, the strategy has worked so far and through the stock split the internet and technology companies keep themselves safe.

A stock split means more controlling power to the founders and board. The management of the company is laudable along with sound corporate governance. Investors will likely tend to buy more shares of Google after the split, which would, in fact, drive growth ahead. Google, which divested itself of its loss making Motorola Mobility business, has robust positioning across numerous search, display, and video advertising platforms, which along with the stock split would guarantee growth in the future.

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4 COMMENTS

  1. “Those who had Google stock in their portfolio before the split were given one Class A share that has voting rights.”

    “If you had Google stock in your portfolio before the
    split, then you de facto had Class A voting shares, and were given one
    Class C non-voting share for each Class A share that you had before the split.”
    ————————————————————————————–
    Different way of expression, but they both end up with 2 offspring shares, one has voting right and the other doesn’t have. The summed up value doesn’t change. 1 = 0.5+ 0.5 at the very beginning of split.
    So the real voting share has half-market value of the original share, and is granted only one vote. I am curious why investors are not selling out ALL nonsense-NONVOTING Class C GOOG and buying in real-VOTING-capable Class A GOOGL shares?

  2. For invetors: why not sell all your GOOG (Class C nonvoting) shares and buy in same amount of GOOGL (Class A voting) shares? In doing so, particularly institute investors can DOUBLE the VOTING share amount (by 1:1 converting them all into Class A). If all big investors do this, the GOOG class C may slide like dirt cheap, but that actually will reflect the true value of a non-voting share which should be zero, if not less than zero. And big investors can increase the voting share amount, increasing their voting influences. Maybe someday they can overturn those bs-share-splitter-dreamseller policy.

    GOOG vs GOOGL may look confusing to retail investor, but if they look it up close enough, it is not hard for retail investor to pick the right stock share to own. For a stock share without voting right, people with voting right can always make its value become zero by “VOTING”.

  3. The article reads:
    Those who had Google stock in their portfolio before the split were given one Class A share that has voting rights.

    This is incorrect. If you had Google stock in your portfolio before the split, then you de facto had Class A voting shares, and were given one Class C non-voting share for each Class A share that you had before the split.

    Before the split, the symbol GOOG was for Google Inc Class A shares. After the split, GOOG was renamed to GOOGL for Class A shares, and a new symbol GOOG (which happens to be the same symbol as for the old Class A shares) was created for the non-voting Class C shares.

    Someone who had X shares of GOOG Class A shares before the split valued at $Y would all of a sudden see X shares of GOOGL Class A shares valued at* $Y/2 in addition to X shares of GOOG Class C shares values at* $Y/2 for a total value of shares of Google Inc values at $Y. (*$Y/2 is approximate… Class A voting shares actually were valued at 50.05% and Class B non-voting shares were valued at 49.95%)

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