Google Stock Split: An Investor‘s Guide

Have you heard that Google recently split its stock? If you own Google shares, are thinking about buying some, or just want to understand splits better, keep reading. This comprehensive guide will explain everything you need to know about stock splits in general and provide an in-depth look at Google‘s specific 20-for-1 split this past July.

What Exactly Are Stock Splits?

Before diving into the details around Google‘s split, let‘sstep back and ensure you have context on what stock splits are and how they work.

A stock split refers to a corporate action taken by a company to divide its existing shares into multiple new shares, thereby increasing the total number of shares available. Splits typically happen on an established schedule, like 2-for-1 or 10-for-1.

Take a simple example:

• Company XYZ is trading at $100 per share
• XYZ initiates a 2-for-1 stock split
• For every 1 share held originally, a shareholder now gets 2 shares
• The price adjusts automatically – now, each share is worth $50
• Shareholders have more shares at a lower per-share value, but their total investment value remains the same

So why do splits? Two major reasons:

1. Improve Liquidity – More shares outstanding can mean more trading activity and market liquidity.
2. Increase Accessibility – Lower share prices allow more smaller-scale investors to buy rounds of shares.

Now let‘s look at the details of Google‘s most recent stock split.

Google‘s 20-for-1 Stock Split Breakdown

In February 2022, Google announced plans for its first straight forward stock split – a clean 20-for-1 across all share classes. Here‘s an overview of what went down:

This table summarizes the changes:

Unlike some past Google splits, this was a straight forward 20x increase in available shares aimed squarely at improving liquidity and accessibility for investors.

Why Google Decided to Split its Stock Now

Google‘s share price has climbed steadily in recent years, topping over $2,000 by January 2022 and continuing to rise. While great for long-term shareholders, high per-share prices can deter smaller retail traders from buying any given shares.

As Viraj Patel, Tech Analyst at Vanda Research told CNBC:

“Google’s upcoming stock split will make its shares more accessible for retail investors – especially younger traders on Robinhood.”

By splitting 20-for-1, Google immediately brought its per-share price down to ~$100, a much more affordable entry point and volume level for regular investors. Increased liquidity and wider ownership is ultimately great for the stock‘s stability and value over time.

What Google‘s Stock Split Means for Current and Future Shareholders

Now that we‘ve covered the details, let‘s discuss the impact on investors – whether you currently own Google shares or want to buy some soon.

If You Currently Own Google Stock

Not much changes for current Alphabet shareholders post-split. You simply see 20x more GOOGL shares in your account, while the share price adjusts lower to keep your total value invested the same. For instance:

• Originally owning 50 shares at ~$2,250 per share = $112,500 total position
• Post-split = 1000 shares (50 * 20) at ~$112 per share = $112,000 total position

Aside from normal market price movements, the split itself has no direct wealth impact. However, increased liquidity could reduce volatility over time and indirectly benefit long-term holders.

If You Don‘t Yet Own Google Stock

The split makes it much easier for regular retail investors to buy Google/Alphabet shares. Lower nominal share prices militate big psychological barriers. Adding some GOOGL stock just seems more viable around $100 compared to over $2,000 pre-split.

Moreover, the ability to buy smaller round lots reduces the absolute dollar amount needed to gain exposure. Trading commissions also reduce proportionally based on share price.

The split ultimately opens the door for more individuals to invest in Google over the long run.

Previous Google Stock Splits Worth Knowing

While the latest split took a simple 20x approach, Google has utilized more complex splits in the past to also address voting control and multi-class stock considerations:

• 2014: 1,998-for-1000 split to create non-voting Class C shares
• 2015: 2.7455-for-1 split on Class C shares only

I won‘t delve into all the details here, but check out this breakdown of past Google splits if interested in learning more.

The key takeaway is that access, liquidity, and voting control all factor into stock split decisions at Google over the years.

Key Questions on Google Stock Splits

Here I‘ll address some common questions for investors on Google, Alphabet, and stock splits in general:

Does a stock split change a company‘s value?

No, market cap and enterprise value stay the same. Think of splits like cutting a pizza into more slices – you just end up with more slices that are smaller.

What happens to options contracts after a split?

Contract strike prices and quantities adjust automatically to the split ratio so value impacts are neutral. Each contract now covers more shares to offset the lower share price.

Could Google split its stock again soon?

It‘s possible, especially if the share price climbs back above ~$200+ per share over the next 1-2 years. Companies often do recurring splits to keep shares affordable.

Is Alphabet the same as Google?

Yes. Alphabet is a holding company that owns Google along with other businesses. Stocks trade under Alphabet ticker symbols GOOGL and GOOG but largely track Google performance.

I hope this guide has broken down the meaning and implications of Google‘s stock split in helpful detail. Please reach out with any other questions!

Sincerely,