Google Inc Splits Its Stock

We take you through the share split from Google Inc (NASDAQ:GOOG).

Nate Weisshaar

Nate 'The Snake' Weisshaar is a senior analyst on the Fool's global equities research team, based in London, and specialising in coverage of European and U.K. companies. His investing interests include banks and other financial companies. Away from the market, Nate enjoys, socc... um, football, mindless action movies, and free running. Before coming to the Fool Nate spent five years providing consulting services for small banks in the United States. He is a qualified Chartered Financial Analyst (CFA).

Published 2 April, 2014 3:39 pm BST

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Google (NASDAQ: GOOGL.US) (NASDAQ: GOOG.US) split its shares today, and shareholders will receive one C class share for every share they currently own.

If you already own the shares, this means there will be several changes to your portfolio but no real change in value.

First, the Class A shares – the ones you currently own – will have their ticker changed to GOOGL.
Second, you will be granted Class C shares, which will have a ticker of GOOG.

Because we have twice as many shares in the company and nothing comes for free, the share price – and your cost basis – will be cut in half.

We’ll also see Google’s reported price – for the GOOGL shares – drop from something close to $1,120 to around $560 – no heart attacks please!

Because the C shares – listed as GOOG – don’t have voting rights, it is probable they will trade at a discount to the A shares. This is a little silly because Google’s founders control the company through their B shares, which have 10 votes to every one for A shares. As minority shareholders we technically have a vote, but no power, so the difference between A and C shares is minuscule.

All of this will require adjustments to your portfolio tracking, but in the end you will still own the same proportion of Google, divided across two different tickers.

Why is Google doing this? We’re yet to find a satisfactory answer.