Google Completes 20-for-1 Stock Split: What You Need to Know

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Google parent company Alphabet will complete its second stock split today at market close. For every share they have, investors who were shareholders of record on July 1 (i.e. those who held shares of Google stock at market close July 1) will be able to receive 19 additional shares. This is a one-time “share dividend”. 

Trading will commence at Monday, July 18, at the split adjusted price. Although buying shares on Monday will be cheaper than buying them today, a single share of the company will still be worth less. The average Google share price was $2,000 before the 20-for-1 stock split. Each share would cost $100 thereafter.

Google offers two stock tickers and several types of shares. This split applies to all Google shares: Class A shares, Class B shares (privately owned), and Class C shares. The Class B and C shares do not have voting rights and are not publicly traded.

The company has only had one stock split since 2004 when it was made public. This happened in 2014. Google’s latest plan was also unveiled simultaneously with its 2014 stock split. Report on fourth quarter revenue for 2021The results were beyond our expectations.

Google is the latest big company to split its stock. Nvidia, Tesla, Apple and Amazon all have already split their stock since 2020. Some of these stock splits are the first in over two decades. GameStop will announce the details of the next major stock split. Its stock splitJuly 21. Tesla shareholders will vote in August on a potential split.

Here are some things to look out for as shareholders, what a company split means for the future, and where each company is in its split process.

What is a stock split?

Stock splits are when a company divides its shares in a specific ratio to create new shares. This lowers the share price. Although you still own a portion of the company’s shares, stock splits can temporarily increase stock volatility or the possibility of large swings in stock price.

Stock splits increase the total number of shares and decrease the stock price. One share of stock is worth $600 when it goes 5-for-1. This would make five shares worth $120 each. All relative investments are retained by shareholders before and after the split.

Stock splits increase the accessibility of shares of a company as they become cheaper and more common. Stock splits can create an environment in which cheaper shares result in higher options trading volumes and more volatility in stock prices for day traders. Arbitrage, which allows shares to be bought and sold simultaneously in different markets at different prices, creates profit opportunities. 

Why do companies decide to split stock?

There are many reasons stock splits can occur. Stock splits are common during growth periods, when a company wants to make shares more accessible for retail investors (or non-institutional). Employee stock-based compensation packages are also available, some of which include Tesla. This gives employees more flexibility.

If a company wants to be included on a stock index like the Dow, it might consider selling its stock. Admission requirements for stock indexes, such as the Dow, can depend on a stock’s price. These indexes can help companies raise money more easily, so companies are worried about being included.

What is the process of a stock split?

Companies may have different processes for implementing a stock splitting. A company will generally propose a stock splitting and inform shareholders about the process and intent. In certain cases, the company will need to get shareholder approval before proceeding with a stock splitting. This step can be taken with or without shareholder approval. The proposal will then be put to the vote of the board of directors or another governing body. 

If the proposal passes the company will work closely with brokerages to set two dates. The cutoff day for stockholders of record and when existing shares will split. The new shares will be distributed to the shareholders who are still registered on the date specified. This is often a few days prior to the official split date.

What were some notable splits in the past years? 

  • GameStopOn July 6, a 4-for-1 stock splitting was confirmed. Shareholders who have shares at the market close on July 18, will receive new shares on July 21.
  • GoogleAlphabet, a parent company to’s parent company, announced on February 1 a 20-for-1 share split. The additional shares will be available to investors on July 15.
  • AmazonAn announcement was made on March 9 regarding a 20-for-1 stock split, and a $10 Billion stock buyback plan. Shareholders who were holding shares as of the close on trading May 27 saw their stock split on June 6. 
  • TeslaOn March 28, a stock split was proposed. Later, intentions were confirmed for a 3-for-1 share. The plan will be put to the shareholders’ vote on August 4. This would be Tesla’s second stock splitting in recent years. It follows its 5-for-1 split August 2020.
  • NvidiaA 4-for-1 stock split was held on July 20, 2021.
  • Apple had a 4-for-1 stock split in August 2020. This was the fifth stock split in the company’s history, since it went public.

What does stock splits mean to current and future investors

Stock splits shouldn’t cause investors to lose or gain any share value. However, in practice, this is not always the case. 

Stocks that are split Average gain of 25%According to Bank of America research, Reuters reported that there was a 9% increase in the benchmark index over the next 12 months. Organic growth may explain the additional 16%, since companies who split their stock do so based upon future financial success.

Stock splits open the market to new investors who want to buy shares at lower prices. After a stock split, investors who were once priced out of certain industries or companies might be able to invest. 

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