Alphabet, on February 1, 2022 has announced that the Board of Directors of the company has approved and declared a 20-for-1 stock split in the form of a onetime special stock dividend on each share of the Company’s Class A, Class B, and Class C stock.
What is Stock Split?
Companies perform many actions to increase investment in their stock, Stock Split is one of them. In Stock Split companies increases number of shares in a certain ratio and decrease share price in the same ratio.
Does it affects investment value?
This question strikes our mind just after we come to know what it is. The answer is no, it doesn’t affects investment value. Investment value remains the same. For ex: A person owns 20 shares of a company ABC and each shares price is $1000, thus total investment of that person in that company would be $20000. If company announces Stock Split in 2:1 then the person having 20 shares would then own 40 shares and each shares price value would be $500 and total investment would remain same i.e. $20000.
Why companies do this?
Companies perform this type of action when there share price is very high. Share having high prices are brought by rich investors only. It decrease the share price so that most of the investor could buy that share. In short it’s method to attract more investors and increase the investment.
The Stock Split is subject to stockholder approval to increase the number of authorized shares of Class A, Class B, and Class C stock to accommodate the Stock Split.If approval is obtained, each of the Company’s shareholders at the close of business on July 1, 2022 will receive, after the close of business on July 15, 2022, a dividend of 19 additional shares of the same class of stock for every share held by such stockholder as of the Record Date. The Google stock split date is July 1, 2022.
Alphabet (GOOG) is trading at around $2912 and was earlier up by almost 10 per cent once the news on stock split came out.In INR, one share of Google costs over Rs 2.25 lakh.Retail investors can own a portion of the stock through Fractional Investing and invest even as low as Rs 1000 in US stocks.Currently, the market capitalization of Google is nearly $1.83 trillion and is expected to cross $2 trillion in the near future.Over the past 12 months, Google’s stock return is around 33%, while the year-to-date return is negative around 4%. Alphabet Inc. (NASDAQ: GOOG, GOOGL) also announced its financial results for the quarter and full year. ended on December 31, 2021.
Sundar Pichai, CEO of Alphabet and Google, said, “Our significant investment in artificial intelligence technologies continues to drive amazing and useful experiences for people and businesses, thanks to our most important products. which has helped millions of businesses thrive and find new customers, record quarterly sales for our Pixel phones despite supply constraints, and our cloud business which continued to grow strongly.”
Ruth Porat, chief financial officer of Alphabet and Google, said: “Our fourth-quarter revenue of $75 billion, up 32% year-on-year, reflects overall strength in advertiser spend and strong consumer online activity, as well as continued substantial revenue growth from Google Cloud. Our investments have helped us drive this growth by providing the services people, our partners and businesses need and we continue to invest in long-term opportunities.”