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.
(Read more Google stories.)

We use cookies. By Clicking "OK" or any content on this site, you agree to allow cookies to be placed. Read more in our privacy policy.
Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.