Alphabet a Google parent company announced its Q4 result. Which made the company’s stock increase by 10% in early market trading. Sales were up 32% every year that’s a big reason for the price pump.
Also, another reason for the price increase maybe because of the big announcement Google made. Google split its stock. Here is all you need to know about why Google split its stock and what it means for investors.
What is a Google Stock Split?
When a company decides to divide its share by a certain factor (let’s say 2-to-1) it is known as a stock split. This caused more shares before the split. It implies that if a stock is split 2 for 1 there will be a double number of shares existing previously before the split. If there is a 2 to 1 split of 15 million in shares of stock, there will be 30 million existing shares of the stock.
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How Much is Google Split Stock?
Google announced a huge amount of its stock split 20 to 1. It implies there will be 20× the number of google shares after the split than the one available today.
Furthermore, owners of google stock have 20 times the amount of share after the split. For example, if John owns 1,000 shares today, after the 20 to 1 split, John will own 20,000 shares of GOOG.
20 to 1 split doesn’t necessarily mean that the value of good shares will increase by a multiple of 20. The other result of the split is that those shares are relatively worthless. If a stock split 2 for 1, the share value is now half of what it was before the split. If there’s a 20 to 1 split, the share is worth 20 times less than its initial value.
So, your share will be worthless after the split. But your share increases 20 times in number after the split, which implies the value of your Google share remains the same.
Also, the stock split does not make Google alphabet a more valuable company. Because each share will be worth 20 times less after the split. This implies that the company’s market cap will remain the same.
Why Bother Splitting Google Stock?
“The share is made more accessible as a result of splitting. The company thought it sensible to do so.” This means that investors like me and you can buy this Google split stock. GOOG stock is currently at $3000 per share, which makes it difficult for average investors. But after the split, you can buy a stock as low as $150 per share, which is much more affordable for average investors.
Finally, according to reports, shareholders will receive additional 19 shares for all the shares they own From July 1 to 15 July. The stock will on July 18 begin trading under a split-adjusted price.
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