What You Should Know About Alphabet's Stock-Split News

Entry point into investing in Google parent company will be lower in July
By Stephanie Mojica,  Newser Staff
Posted Feb 2, 2022 2:39 PM CST
Alphabet's Stock-Split News Could Lead to a Dow Tweak
The parent company of Google, Alphabet, plans to split its stock into 20-for-1 shares, the Wall Street Journal reports. This makes investing more appealing for those with fewer financial resources, experts say.   (AP Photo/Michel Euler, File)

Alphabet has had plenty of people doing division over the last day, after the Google parent company announced a planned 20-for-1 stock split, the Wall Street Journal reports. What does this mean for the value of the stock, the future of Alphabet and its subsidiaries, and the stock market at large?

  • First, what is a stock split? The Journal provides this math: If a share of stock is worth $400 and the company splits it into four, that investor now has four stocks worth $100 each. That makes it easier for someone put off by a $400 share price to invest in a company. Such splits used to be the norm once a company's share price crept into the three figures; they're far less typical these days.

  • The ins and outs of Alphabet soup. The planned split will happen in six months, with shares held on July 1 being split into 20 on July 15. The news came in the company's Q4 earnings report on Tuesday. Alphabet’s Class A shares closed at $2,753 that day; were the split to be based on that price (not the case), each share would be worth $137.64. Shares are trading up 8% Wednesday.
  • A very brief history of stock splits. Alphabet stole the stage from Apple and Tesla, companies that recently split their stocks into 4-for-1 and 5-for-1, respectively. Quartz reports other recent stock splitters include The Trade Desk (an adtech company that split 10-for-1) in 2021 and Amalgamated Bank in 2018, which split 20-for-1.

  • What about the Dow? Alphabet isn't currently part of the Dow Jones Industrial Average, but could now become a more appealing candidate. IBM, which has experienced stunted growth for a long time, could theoretically be replaced by Alphabet on the Dow, CNBC reports. IBM is trading at around $135 a share. If Amazon splits its stock (which the company has resisted) to avoid being the only tech giant with a four-figure investment price per share, it would be a highly attractive Dow candidate as well, per MarketWatch.com.
(More Google stories.)

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