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What Google’s 20-for-1 stock split could mean for investors

Google parent company Alphabet [GOOGL] announced its Q4 earnings yesterday to much fanfare. The tech firm clobbered analyst estimates and displayed the continued growth that we’ve become accustomed to from Big Tech. 

This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.

One thing that did surprise us, however, was the shock announcement of a 20-for-1 stock split.
 

So, what does this change?

In a word — nothing. For every share you currently own you’ll receive 19 more — pretty sweet deal, right? The important thing to keep in mind is that the intrinsic value of your shares is in no way diluted. You still own the exact same proportion of the company as you did before the split. All this does is make individual shares more ‘cosmetically’ affordable, potentially widening the pool of prospective shareholders for the business.

For Google, this move offers a couple of advantages. Primarily, it gives its stock more liquidity. The stock instantly becomes more affordable for smaller investors and, as such, trades are likely to increase among investors not utilizing fractional shares. Had the split happened at market close yesterday, Google stock would’ve gone from $2,752.88 per share down to $137.64.

This move, combined with its stellar earnings report, has seen Google soar by more than 8% in after-hours trading. Now, however, all eyes turn to another tech giant that has long rebuked the prospect of a stock split. Amazon is the only remaining Big Tech company with a four-figure individual stock price. 

Apple and Tesla both split in 2020, and now Google has joined the club in spectacular fashion. With Amazon’s price currently sitting north of $3,000 per share, there are many on Wall Street calling for a split. The company announces its Q4 earnings tomorrow, but could it shock us just like Google did? 

Let’s find out together.

MyWallSt gives you access to over 100 stock picks and the research to back them up. Our analyst team posts daily insights, subscriber-only podcasts, and the headlines that move the market. Start your free trial now

 
 

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

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