Will Google Stock Split Again?

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Will Google Stock Split Again?

seekingalpha2021-04-13

Summary Google split shares 2-for-1 in early 2014, but it was not an ordinary split and involved the creation of a new class of non-voting shares. Apple and Tesla both rose significantly after they ...

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JoeK
·2021-04-13
Most probably a matter of time
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belle111
·2021-04-13
Buy
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Hazydusk
·2021-04-13
Please do
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- Hazydusk:
  Still buying? Premarket was a steal
  2021-05-12
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- JoeK:
  buy before that
  2021-04-13
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- Hazydusk:
  Test reply @Hazydusk
  2021-04-13
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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWill Google Stock Split Again?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-13 14:03 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4418703-google-stock-split-again><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nGoogle split shares 2-for-1 in early 2014, but it was not an ordinary split and involved the creation of a new class of non-voting shares.\nApple and Tesla both rose significantly after they ...</p>\n\n<a href=\"https://seekingalpha.com/article/4418703-google-stock-split-again\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"GOOGL","symbol_name":"谷歌A","start_time":0,"source_url":"https://seekingalpha.com/article/4418703-google-stock-split-again","article_id":"1136208119","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1136208119","pubTimestamp":1618293800,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Summary\n\nGoogle split shares 2-for-1 in early 2014, but it was not an ordinary split and involved th","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"GOOGL":"谷歌A","GOOG":"谷歌"},"translate_title":"谷歌股票是否会再次分拆？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOOG":0.9,"GOOGL":0.9},"content_text":"Summary\n\nGoogle split shares 2-for-1 in early 2014, but it was not an ordinary split and involved the creation of a new class of non-voting shares.\nApple and Tesla both rose significantly after they announced stock splits in 2020, and I believe Google would react similarly.\nA higher valuation for Google shares from a stock split would be a mixed blessing as Google has been repurchasing a significant amount of shares.\n\nPhoto by 400tmax/iStock Unreleased via Getty Images\nWith a share price over $2000, speculation is rising that Alphabet, Inc. aka Google (GOOG) (GOOGL) could announce a stock split sometime in 2021. Google has split the shares before, so there is precedent, although the reasons for the prior split were not exactly straightforward.\nGoogle's stock split history\nGoogle announced its first and only split in early 2012. It was not an ordinary split and involved Google creating a new, non-voting class \"C\" of shares, which trade under the Google (GOOG) ticker, that would be distributed to owners of the class \"A\" shares, which trade as Google (GOOGL), as well as to the owners of class \"B\" shares.\nClass \"B\" shares are a super-voting share class that receives 10 votes per share, compared to 1 vote per share for class \"A\". The \"B\" shares are not publicly traded and are primarily held by co-founders Sergey Brin and Larry Page, as well as former CEO Eric Schmidt.\nBy distributing a new, non-voting share class to both \"A\" and \"B\" holders, this provided a way for the class \"B\" holders to sell or donate some of their shares (by selling the new, non-voting \"C\" shares) while retaining full voting control in the company.\nGoogle shareholders filed a lawsuit that this was not in shareholders' best interest, but this was settled in late 2013, with the split finalizing on March 27, 2014.\nIs the stock fairly valued? How should investors approach valuation for Google shares?\nWith the benefit of hindsight, Google shares really looked cheap as recently as last September/October when shares were in the $1500 range. Even after a 50% run, I still don't see the shares as overvalued considering the quality of their business and projected growth rates. Google remains a market leader with an extraordinarily deep moat and should command a premium multiple because of it.\nData by YCharts\nAs I described in my article comparing Amazon (AMZN) to Google, I believe Google's earnings are understated due to its massive investments into Google Cloud and \"Other Bets\". Google had $41 billion in operating earnings in 2020, but that included a $5.6 billion loss in Google Cloud and a $4.5 billion loss in \"Other Bets\", which are a transformational collection of businesses, including Waymo self-driving cars.\n\nEven without making any special adjustments for Google Cloud and Other Bets, Google seems fairly valued at current levels. Adjusting for these, which I think is appropriate, suggests Google to be somewhat undervalued.\nWill Google's stock split again?\nThe historic reason for stock splits was \"to make shares more attractive to a broader pool of investors.\" Historically, there were additional fees, called odd lot fees, for small purchases typically under 100 shares. Today, some investors are unable to afford purchasing even a single share of a stock trading in the thousands. But odd lot fees are a thing of the past, and many brokerages offer fractional trading for companies like Google that have higher share prices.\nWhile fractional trading does make owning expensive stocks a possibility for smaller investors, Google's extreme share price does effectively prohibit many smaller investors from using options. Selling covered calls is a popular income generation strategy for many investors, but to do so with Google requires 100 shares, which at the current price is over $220,000 worth.\nIt's true that share splits do nothing to increase the intrinsic value of a company, since one share at $100 is the same as two shares at $50. But the NASDAQ recently found real benefits in better spreads, increased liquidity, and lower intraday volatility. Beyond this, even if the impact is mostly psychological, that doesn't make it less real.\nMany studies, including several by David Ikenberry, Chairman of the Finance Department at the University of Illinois at Urbana-Champaign, found price performance of split stocks outperformed the market significantly before and after the split. Similar research has been conducted in various markets around the world. While there is much debate on the magnitude of the impact, as well as how much selection bias is present, I have yet to see any study which has concluded stock splits are a negative for share price.\nRecent examples, Apple (AAPL) announced a 4-for-1 stock split with their earnings on July 30th that became effective August 28th. The stock rose significantly from the announcement to the split.\nData by YCharts\nTesla (TSLA) announced a 5-for-1 spliton August 11th that became effective on August 31st. It nearly doubled by the time it split!\nData by YCharts\nIf Google split 5-to-1, seeing the shares rise 10-20% would not surprise me at all.\nShould Google split the stock?\nIf we accept the conclusions above that a stock split would be a positive for the share price, why wouldn't Google move forward with it? The reason is that Google has been repurchasing a significant amount of shares and is likely to continue to do so in the future.\nFor companies like Tesla that have been sellers of its own shares, a higher share price is a total positive. If a stock split acts as a positive catalyst for the share price, it makes sense for Tesla to do. But Google has been repurchasing a significant amount of shares, $31.15 billion in 2020, up from $18.39 billion the previous year. For companies that are returning capital by repurchasing significant amounts of shares, doing so at lower valuations is preferable.\nAs an investor of a company that's repurchasing shares, is a higher current share price a good or a bad thing?\nThis is a topic where I believe the \"theoretical answer\" and the \"practical answer\" diverge. Ultimately, the answer will be unique to each investor depending on their personal situation and time horizon, which is what makes it tricky. For investors with a long time horizon, a lower share price is vastly preferable, since the company can repurchase at a more attractive valuation. For investors with a shorter time horizon or those that may wish to diversify into other holdings, a higher share price may be preferable.\nIt's a complicated situation and every company seems to approach it differently. Apple has been repurchasing significant amounts of shares for over a decade, but they still split the stock 7-1 in 2014 and 4-1 last year.\nEven for people like Warren Buffett, the answer isn't straightforward. Berkshire Hathaway (BRK.A) (BRK.B) is now repurchasing a large amount of shares, and a higher share price means that future repurchases are done at less attractive valuations. But it also means the shares Buffett has donated in the past to various charities, including the Gates Foundation, can be sold for more money.\nConclusion\nUltimately, I do not see Google splitting the stock in 2021. I believe the 2014 split was done primarily to allow Google insiders to sell shares but retain voting control in the company, so I don't think the past precedence here carries much weight.\nGoogle co-founders Larry Page (age 48) and Sergey Brin (age 47) still retain effective control of the company with over 50% of the voting power, and current Google CEO Sundar Pichai is only 48 years old. I believe they are all focused on long-term value creation and would like Google to continue repurchasing shares at a reasonable valuation, and would not view Google's share price suddenly appreciating stock split excitement as a positive.\nThat said, I still find Google to be a solid long-term investment, even without a split as a near-term catalyst.\nIt's still a buy.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":345818327,"gmtCreate":1618298941269,"gmtModify":1704708762281,"author":{"id":"3575261937306050","authorId":"3575261937306050","authorIdStr":"3575261937306050","name":"JoeK","avatar":"https://static.tigerbbs.com/162445e8b6a553bd412b8a06e3f44c9e","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3575261937306050"},"htmlText":"Most probably a matter of time&nbsp;","listText":"Most probably a matter of time&nbsp;","text":"Most probably a matter of time","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/345818327","repostId":1136208119,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":345808098,"gmtCreate":1618294911814,"gmtModify":1704708717459,"author":{"id":"3576012921296307","authorId":"3576012921296307","authorIdStr":"3576012921296307","name":"belle111","avatar":"https://static.tigerbbs.com/6f46e52365860eac5a81ef82845a2f73","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3576012921296307"},"htmlText":"Buy&nbsp;","listText":"Buy&nbsp;","text":"Buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/345808098","repostId":1136208119,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":345177255,"gmtCreate":1618294167477,"gmtModify":1704708712442,"author":{"id":"3573677641656185","authorId":"3573677641656185","authorIdStr":"3573677641656185","name":"Hazydusk","avatar":"https://static.tigerbbs.com/8a582cea556a27fd219a803a1bc56961","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3573677641656185"},"htmlText":"Please do","listText":"Please do","text":"Please do","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":4,"repostSize":0,"link":"https://ttm.financial/post/345177255","repostId":1136208119,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4302043,"gmtCreate":1620810868934,"gmtModify":1680788304015,"authorId":3573677641656185,"author":{"id":3573677641656185,"authorId":3573677641656185,"name":"Hazydusk","avatar":"https://static.tigerbbs.com/8a582cea556a27fd219a803a1bc56961","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":345177255,"type":1,"supId":4023124,"prevId":0,"content":"Still buying? Premarket was a steal","text":"Still buying? Premarket was a steal","html":"Still buying? Premarket was a steal"},{"id":4023124,"gmtCreate":1618298951707,"gmtModify":1680783863332,"authorId":3575261937306050,"author":{"id":3575261937306050,"authorId":3575261937306050,"name":"JoeK","avatar":"https://static.tigerbbs.com/162445e8b6a553bd412b8a06e3f44c9e","vip":1,"crmLevel":6,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":345177255,"type":1,"supId":0,"prevId":0,"content":"buy before <u>that</u>","text":"buy before <u>that</u>","html":"buy before <u>that</u>"},{"id":4022814,"gmtCreate":1618294208590,"gmtModify":1680783860904,"authorId":3573677641656185,"author":{"id":3573677641656185,"authorId":3573677641656185,"name":"Hazydusk","avatar":"https://static.tigerbbs.com/8a582cea556a27fd219a803a1bc56961","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":345177255,"type":1,"supId":4022813,"prevId":0,"content":"Test reply<a href=\"https://laohu8.com/U/3573677641656185\"> @Hazydusk</a> ","text":"Test reply<a href=\"https://laohu8.com/U/3573677641656185\"> @Hazydusk</a> ","html":"Test reply<a href=\"https://laohu8.com/U/3573677641656185\"> @Hazydusk</a> "},{"id":4022813,"gmtCreate":1618294189726,"gmtModify":1680783859414,"authorId":3573677641656185,"author":{"id":3573677641656185,"authorId":3573677641656185,"name":"Hazydusk","avatar":"https://static.tigerbbs.com/8a582cea556a27fd219a803a1bc56961","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":345177255,"type":1,"supId":0,"prevId":0,"content":"Will buy in more ","text":"Will buy in more ","html":"Will buy in more "}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":6,"commentSize":3,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}