Google Inc (GOOG) (GOOGL): Don’t Get Confused By The Stock Split

Google Inc (GOOG) (GOOGL): Don’t Get Confused By The Stock Split
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Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) shares started trading under two new class tickers yesterday. The search engine giant announced the 2-for-1 stock split on January 30 during its Q4 earnings conference call. Two tickers may cause some confusion among investors because the old class-A shares that previously traded under ‘GOOG’ will now trade as ‘GOOGL.’ The new, non-voting class-C stock will take over the old ‘GOOG’ ticker symbol.

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Google exits the $1000 stock club

A third class of shares, class-B has super-voting rights. They are held by Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) chairman Eric Schmidt and co-founders Larry Page and Sergey Brin. The class-C shares have no voting rights, the class-A shares have one vote per share, while class-B is entitled to ten votes per share. As a result of the stock split, investors received one class-C share for each class-A and class-B shares they own. Consequently, the old stock price has been halved, and Google is now out of the $1000 stock club.

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As of this writing, Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s class-A shares ‘GOOGL’ were down 1.64% to $561.99. The new class-C shares plunged 1.67% to $560.22. The split will allow Google founders to tighten their control over the company. Morgan Stanley analysts said yesterday in a research note that the Mountain View-headquartered company may use the new class of shares for mergers and acquisitions.

Google’s class-A likely to be more popular than class-C shares

Some indices have made changes in their composition due to Google’s stock split. Nasdaq OMX will remove the class-A ‘GOOGL’ shares from the index, and replace it with the new class-C shares. Meanwhile, the S&P Dow Jones has decided to include both types of stocks. As a result, the S&P index will now have 501 stocks.

Some experts say that the class-A shares will trade more than the class-C shares given investors would prefer to have shares with limited voting rights over the non-voting shares. However, practically speaking, neither type of shares will give them any significant control over Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL). To help keep the share value equal between the different classes of shares, the search engine giant has promised to pay shareholders up to 5% of the difference between class-A and class-C shares in the first year of trading.

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