The Google split

So here is the quick rundown for Google. It’s currently 3 classes of shares. Class A ($GOOG), Class B (preferred) and class C (GOOGL). Both class A and class C should have the same value on the markets however the only difference is the Class C ($GOOGL) has 1x value of voting rights. This however is irrelevant as class B owns 10x the voting rights per share and is a majority ownership by Page and Brin. In short, not important.

So now the split. It is defined as an owner of any 3 of the class shares owned in July 1st will receive 19 additional shares on july 15th (20:1 split).

Historically a stock split starts to run 30-60 days prior to stock split (see AAPL or NVDA as recent behemoths to do so). So price action will begin likely in May although this has no physical impact on the company as a whole… or does it?

Opinion piece: I believe that Google is doing this split for 1 main reason, to get onto the Dow Jones industrial average. At a 20:1 split at current prices Google shares will trade at about $130. An underperforming blue chip company in the Dow right now is IBM, which happens to be at $135, making it a relatively easy transfer.

Naturally for funds to balance their portfolio they will buy the incoming company causing the stock price to rise as well once announced.

Given these are hypotheticals, I am also looking at googles growth, and in short their recent earnings has just been a blowout with more to come.

As a result, I will be entering a position of 20 shares of $GOOGL Tuesday morning and cost averaging on a monthly basis until May to put my money where my mouth is.

Feel free to add additional commentary


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