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.
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.
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.
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.
