Intro
Google (GOOGL) stock has been through two stock splits since it started trading on the stock exchange in 2004. In this article, we'll take a closer look at Google's stock split history, as well as what to expect regarding future stock splits, and whether to buy Google stock before or after a split.
THE ESSENCE
- Google has split its stock 2 times since the company went public in 2004
- The most recent stock split was in July 2022, a 20-to-1 split
- There is no way to know ahead of time when the next stock split will happen
Google stock splits
History of Google stock splits
A stock split is when a company decides to increase the number of its shares by splitting each existing share into several new shares. It is usually done to boost the stock's liquidity, and make it more attractive to individual investors, as a stock split also reduces the price of each share proportionally.
So far, Google stock has gone through a total of 2 stock splits since 2004, when it was listed on the Nasdaq stock exchange.
The situation with Google's stock splits is a bit more complicated than at other companies. The first stock split, in 2014, was used in a non-traditional manner, to create a new class of shares, and the split ratio was also a little unconventional. The second share split, carried out in 2022, was done in a more traditional manner.
In the table below we present the history of Google's stock splits in a slightly simplified version, in order to get a good overall picture. If you're interested, you can dig deeper in the detailed version below.
| Date | Split | Cumulative split |
|---|---|---|
| April 3, 2014 | 2-to-1* | 2-to-1 |
| July 18, 2022 | 20-to-1 | 40-to-1 |
*actual split was 1998:1000
As you can see, the most recent stock split occured on July 18, 2022 with a 20-to-1 split.
Also, the table shows that one Google share bought prior to April 2014 would be equal to around 40 Google shares today.
Detailed version
So what really happened with Google's stock splits, in more detail? It involves various share classes, complicated fractional numbers for split ratios, as well as a split used as a form of compensation. Let's take a closer look, going step by step.
April 2014 stock split: 1998-to-1000
Before April 2014, there was only one type of Google share available to investors, a so-called class A share, which went by the ticker symbol GOOG. The company's directors and founders decided to strengthen their overall voting control in the firm: they did this by creating a new C class of shares, which does not carry any voting rights. They used a share split to carry this out, with the added positive result of cutting the share price in half. Here's what happened:
- Each owner who held previous class A (GOOG) shares, with voting rights, received additional, newly created class C shares, without voting rights.
- For each 1,000 class A shares owned, they received 998 class C shares (in the simplified version above, we rounded this to a 2-to-1 split).
- The class A shares also changed their ticker symbol to GOOGL.
- The newly-created class C shares took on the ticker symbol GOOG.
- The stock price of Google shares fell from around $1,135 before the split to $568 after the split.
Let's see what this looks like in table form.
| Class A shares (GOOG) | Class A shares (GOOGL) | Class C shares (GOOG) | |
|---|---|---|---|
| Before April 3, 2014 | 1,000 | - | - |
| After April 3, 2014 | - | 1,000 | 998 |
| Voting rights | Yes | Yes | No |
So a person who held 1,000 class A (GOOG) shares with voting rights prior to the stock split, ended up with 1,000 class A (GOOGL) shares with voting rights, as well as 998 newly-created class C shares (GOOG), without any voting rights, after the stock split.
April 2015 split: compensation for class C shares
Another stock-related transaction occurred with Google shares in April 2015, which only affected the class C (non-voting) shares. Technically it was a stock split, but in essence it was a form of compensation for the holders of these shares. They were compensated in this way for owning shares that have no voting rights, and thus are worth less (class C GOOG shares typically trade 1-5% below the price of class A GOOGL shares). Here are the main points:
- The split only affected non-voting, class C Google (GOOG) shares.
- For every 1,000 class C shares owned, shareholders received 2.7455 additional class C shares.
- Expressed in ratio form, this means the stock split ratio here was 10027455:10000000.
- Due to the relative small (ca. 0.27%) change in the number of shares, the stock price was virtually unaffected by the stock split.
Again, let's look at it in a table as well.
| Before April 27, 2015 | After April 27, 2015 | |
|---|---|---|
| Class A Google (GOOGL) shares (voting) - not affected | 1,000 | 1,000 |
| Class C Google (GOOG) shares (non-voting) | 1,000 | 1,002.7455 |
A person holding 1,000 class A and 1,000 class C Google shares before this split thus ended up with the same number of class A, and slightly more (2.7455 more) class C shares after the split.
July 2022: traditional 20-to-1 stock split
After all the previous complicated math, Google's last stock split, carried out in July 2022, was refreshingly traditional. It was a 20-to-1 stock split that affected all of the stocks's share classes – A, B and C class shares.
We haven't mentioned class B shares yet, as these are not available for the public to trade so they are less relevant. This class of shares is typically held by insiders like the company's founders and directors, and are "super-powered" shares, in the sense that they have ten times the voting power of class A shares.
Let's go to our handy table!
| Before July 18, 2022 | After July 18, 2022 | |
|---|---|---|
| Class A Google (GOOGL) shares (voting) | 1,000 | 20,000 |
| Class B Google shares (10x voting power) | 1,000 | 20,000 |
| Class C Google (GOOG) shares (non-voting) | 1,000 | 20,000 |
In summary, if a person held 1,000 each of A, B and C class Google shares before this split, they ended up with 20,000 of each share class after the split.
The stock price of Google (GOOGL) shares was around $2,236 before the split, which decreased to around $112 following the stock split.
What does a 20-for-1 share split mean?
A stock split increases the total number of shares of a company, without affecting its overall market value. At the time of the 20-for-1 stock split at Google in July 2022, investors were allocated 20 Google shares in exchange for each 1 share they held.
At the same time, a stock split reduces the price for each share: during the last 20-for-1 split, the value of each Google share decreased from around $2,236 before to around $112 after the split. As a result, the value of an investor's overall holding does not change, it simply increases the number of shares owned.
E.g. The total value of 10 Google shares, worth $2,236 each, equals the same as 200 shares worth $111.8 each: $22,360.
A stock split can make it more attractive for retail investors with smaller portfolios to invest in a stock. This is especially true if the brokerage they use for stock trading does not allow them to buy fractional shares (a smaller portion of one share).
Google stock splits
When will Google do a stock split?
There is no way to know ahead of time when Google will decide to do a stock split. Stock splits are decisions made by a company's directors, and are usually conducted to make their stock prices more affordable and attractive to retail investors, by reducing the nominal share price.
- Before its April 2014, approx. 2-to-1 stock split, Google shares traded at around $1,135, which decreased to $568 after the split.
- Meanwhile, the value of one Google (GOOGL) share was around $2,236 before, and $112 after the 20-to-1 stock split that took effect on July 18, 2022.
Keep up to date on the latest Google news to find out whether a stock split is being planned. Here are some trustworthy news sources to follow:
Google stock splits
Should you buy Google stock before or after a split?
There is no clear answer as to whether you should buy Google stock before or after a stock split.
A stock split does not by itself have any impact on a company's fundamentals. In general, stock splits are a neutral event that do not have a significant effect on the financial performance or overall value of a company.
Therefore, you should not place too much importance on the timing of a stock split when deciding whether to buy or sell Google stock. Instead, focus more on your research and analysis of the company's financial situation and growth potential.
However, stock splits can lead to higher liquidity and trading volume, which could make it easier for investors to buy or sell shares.
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If you have your eye on Google shares as your first stock trade ever, use our dedicated step-by-step guide to make the process smooth and easy. We'll help you invest in stocks on your own in no time!
