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.
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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.
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