The long-awaited and much-clamored-for Google stock split has arrived. The split, which will see one share of GOOG stock divided into two shares, is a little more complicated than a simple straight-forward split. Instead of two shares of GOOG at half the value of the pre-split stock, investors will now see two separate stock tickers for Google: GOOG and GOOGL. Class A shares trade under GOOGL and retain voting rights, while the new Class C shares will take over the classic GOOG ticker and lose all voting rights.

The move, according to MarketWatch, is meant to both make Google stock more accessible and will also help Google co-founders Sergey Brin and Larry Page retain control over their voting shares and thus the company, as going forward Google is only likely to issue non-voting Class C shares.

Both Brin and Page hold non-trading Class B shares in Google, and they too will receive a Class C share to go along with each Class B share they hold. This will help to maintain the current voting balance of power within Google.

As of closing yesterday, shares of GOOG were trading at $1133.96. After this morning's split, GOOG is now half the value, and is up more than 2% in early trading. GOOGL too is up, and we'd expect the two stocks to trade fairly closely over time — the voting rights of the Class A shares are really only useful if you hold a lot of shares.

Source: Google

 

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Google stock split arrives as 2-for-1 deal for investors

14 Comments

Interesting move - the new class does allow Google more flexibility to acquire new companies with out giving up control, which is what this is all about in the long term. Otherwise, it's in Sergey and Larry your trust.

It should be noted that Class A and Class C shares are essentially pegged to each other for the first year, with Google on the hook to make up the difference if the Non-voting C shares fall behind the Voting A shares.

This is all about them maintaining control while being able to sell off some shares. It's like having your cake and eating it.

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Another way to put it, it's like being a private company with the access to cash like a public company...

-Suntan

It's also a way to issue (read: dilute) Class C shares in the future while retaining the value in the Class A shares. Who wins in this setup? Hint: it's not the general investor with Class C.

First thing this morning, I traded the GOOG class C shares I was issued for GOOGL class A shares, so now all of my Google shares are GOOGL class A. It may have been for nothing, but on the off chance GOOGL class A shares are worth more than GOOG class C shares down the road since no more will be issued, I will be sitting pretty.

Exactly. Why not get voting rights if you are going to own google. You can still buy the class A shares, which will be more valuable going forward! Although there are provisions to add value to class c shares if they fall behind in value too much.

Awesome. Same here.

(In case you are awful at math and sarcasm we both still have zero)

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Berkshire Hathaway did the same thing. The stock prices are NOT pegged to each other in that case, nor will it be in Google's case, the stock price is dictated by the market and both stocks will make different moves at different times as they are meant for 2 different classes of investors. The big dogs will only invest in Class A shares, while the little guy will buy the non-voting class C-shares because they are "cheaper" without knowing exactly why. Big investors don't panic like the people who would buy the cheaper shares. They should have just implemented a poison pill if it's all about keeping control.