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Google splits into GOOG and GOOGL today
- Aqueous 13y ago"The much-awaited Google 2-for-1 stock split is finally happening on Wednesday when shareholders of record as of March 27 will get two shares for every one they owned." Out of curiosity what happens if you bought shares on March 28th? Does your stock price just go to $600 or can you petition Google to have the new Class C shares issued to you to make up the loss in price?
- drcode 13y agoI'm assuming those people would just get their extra shares after a few days of extra delay.
- jrockway 13y agoNASDAQ made the situation a little more complicated by reporting GOOG as the price of the Class A share (soon to be GOOGL) plus the price of the right to have a Class C share distributed to you. My brokerage linked me to this FAQ: http://nasdaqtrader.com/content/GOOGfaqs.pdf http://nasdaqtrader.com/content/GOOGfaqs.pdf
- greenyoda 13y agoTo summarize the relevant part of this FAQ: "On March 27, the Class C shares will commence trading on a WHEN ISSUED basis (GOOCV). At that same time, the EX DISTRIBUTION WHEN ISSUED market for the class A shares (GOOAV) would be made available. This market represents the ability to trade the Class A stock without entitlement to the Class C distribution. From March 27 through April 2 we will be trading: Class A shares regular way, with entitlement to the class C shares (GOOG); Class C shares when issued (GOOCV); Class A shares on an EX Distribution, when issued basis (GOOAV)." So on the 28th, you would have a choice: If you bought shares of GOOG, you'd pay the full price, and you'd be entitled to the stock distribution. If you bought GOOAV or GOOCV, their prices would reflect the fact that you would not be entitled to the stock distribution, which means you'd pay roughly half the price of what you'd pay for GOOG.
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- wtracy 13y agoDoes this imply that GOOG and GOOGL shares will have prices that will move independently going forward? This should be interesting to watch.
- Me1000 13y agoYes, the $GOOGL and $GOOG stock will have independent prices.
- drcode 13y agoYes, and Google has committed to pay an extra dividend if the prices diverge too much, because laws.
- guyzero 13y agobecause lawsuits.
- gojomo 13y agoI can't find details on this... do you have a link? (I'm wondering what conditions would trigger this 'extra dividend', and when.)
- drcode 13y agoSorry, can't find it, but one of the recent news stories on the split said there would be a special dividend that kicks in after 2% divergence in price.
- guyzero 13y agoOK my other comment got voted down - the potential extra dividend is not because of "laws" but because of a lawsuit settlement. http://googleclasscsettlement.com/ http://googleclasscsettlement.com/
- drcode 13y agoI agree it's because of the lawsuit, but usually people settle lawsuits because they think the law will rule against them.
- ilarym 13y agoSo... this is an April Fool's joke, right?
- notatoad 13y agono. april fools was yesterday, and this has been extensively reported over the last few months.
- ajcarpy2005 13y agoThere seems to be a push to diversify and expand Google's income recently. Google Play Music All Access, Google Helpouts (20% cut), this stock change, Google fiber (while competitively priced, I expect there will be long-term profits), Google Glass, etc. I have been noticing this and assume it's meant to help them fund their robotic and autonomous car projects. These are likely capital-intensive segments of the company.
- lukesandberg 13y agohow does the stock split affect income? afaict it is purely about governance
- jonknee 13y agoCorrect, they (or anyone else) are not making money directly off this. Just like a regular stock split, when there is a 2 for 1 split each share is instantly worth 1/2 and no one is richer.
- jacques_chester 13y agoGoogle have been trying to find something apart from advertising since pretty much day dot. It's a strategy pioneered by Microsoft, I call it "spaghetti cannon". Turn your free cashflow into spaghetti, fire it at a wall, hope something sticks. It's sorta-kinda worked for MS. They have 4 or 5 distinct lines of business, each of which could qualify as an F500 alone. Google don't have that. They have 1, and only 1, line of business sustaining every outlay they have. They've only ever had 1, and only 1, line of business, right back to their first public reports.
- Ellipsis753 13y agoWell I wouldn't say they have only a single line of business. Yes, they make pretty much all of their profits from advertising. However they no longer just do searches. They do email, file hosting etc. You name it and they probably do it. They do make money from ways other than advertising too. They have quite a few pay to use services. Like business emails or Google Drive.
- bane 13y agoSo does this mean we should expect some large-ish acquisitions in the near future?
- wtracy 13y agoThey're not selling any new shares, just splitting existing ones. So I suspect no.
- antonius 13y agoNo. This essentially means there will be two classes of Google Stock (A and C) with Class A stock having more voting power than Class C stock from a shareholder prospective. This dilution of shares essentially gives those with a large share of stock options (like Brin & Page) more power. Edit: As a user pointed out, Class B should be Class C
- cowsandmilk 13y ago(a) there already were two classes of shares, A and B. This creates a third class C with no voting power (b) the argument in the article is that Google would then issue class C shares for use in acquisitions. Brin & Page did not want to issue more A shares, which would risk their majority control; but they would be willing to issue C shares and use them to acquire companies as they would have no dilutive effect on their majority control.
- 001sky 13y ago“They couldn’t do a big deal before using stock because it changes the voting rights,” he said. “Now, they’ve got a mechanism where they can use their paper for deals and not lose their majority voting rights.” This implies so. And FB has done $22B in deals since the IPO.
- aareet 13y agoDo Google employees get Class A, B or C stock?
- tmhedberg 13y agoEvery existing class A or B share will be matched by a class C share. Most Googlers had class A shares before, so now we'll have half class A and half class C, i.e. twice as many total shares, with the same number of votes as before.
- fiatmoney 13y ago"Ownership" without control gives you precisely nothing, except for perhaps standing in a shareholder lawsuit. A company being unaccountable to its investors should make it unattractive as an investment.
- Klinky 13y agoShareholder accountability is pretty much bogus. The only shareholders who have ever had a real say are those who owned vast quantities. The flood of blind investing through retirement funds has further diluted shareholder influence to little more than demanding increasing share price.
- fiatmoney 13y agoLarge institutional investors like mutual funds, pension funds, etc. have at least some of their incentives aligned with their own investors - they want the value of their holdings to go up (to increase management fees), which means exercising some level of corporate governance. For instance, looking askance at value-destroying vanity purchases (arguably, Oculus being the latest example). Even this minimal level of oversight isn't possible when they have no voting rights worth mentioning.
- Klinky 13y agoShareholders are so far out of the loop, rarely are they consulted on important business decisions. Usually when things start going sour is when they start making noise, and by that time it's often too late. Most aren't going to question the actions of the company so long as the price keeps going up. While an institutional investor could divest themselves of a stock if they don't like how the company is managing their purchases, it would likely be hard to justify removing GOOG, APPL or FB from their portfolio right now. It's not like mutual fund managers are that great at beating the market, especially after fees.
- wbl 13y agoSome managers make turning around failing companies as stockholders their business. They go in, push for changes that will increase the value of the company, and exit, taking the cash and look for another failing company they think can do better.
- ForHackernews 13y agoWhat if you hold Google shares as part of an index fund? Does the fund now hold both GOOG and GOOGL?
- jspaur 13y agoYes (assuming the fund buys/holds all positions and hasn't taken an optimization strategy) This has some interesting side effects to things such as the S&P 500 (http://www.forbes.com/sites/investor/2014/04/02/google-moves-the-market-introducing-the-sp-501/ http://www.forbes.com/sites/investor/2014/04/02/google-moves...)
- therealarmen 13y agoThis is meant do to one thing -- let the founders retain control while allowing for large stock acquisitions. It's possible Google was muscled out of the Whatsapp deal simply because they couldn't pony up the money. $20B is almost half of their cash on hand. Note that the Nest and Waze acquisitions (small in comparison) were paid for almost entirely in cash.
- sillysaurus3 13y agoDid FB pay $19B for Whatsapp in order to prevent Google from acquiring their userbase? That is, FB got into a bidding war with Google over Whatsapp?
- nyrina 13y agoIt could certainly be a large factor in the massive price. $19B is a whole lot of money, even (especially?) for a company the size of WhatsApp
- eitland 13y agoInterestingly the size of WhatsApp (the team and the required hardware) compared to its userbase might actually be one of the reasons why the price went so high. In other words, - they had a very good engineer to end user ratio.
- matthewmacleod 13y agoI don't think so. They'd obviously built a stable platform, but it's not anything that Facebook couldn't have recreated with far less investment.
- jbrooksuk 13y agoThen they probably spent so much to acquire the user base.
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- ksec 13y agoIs it only in the US where it is allowed for stock shares to have no voting power? Because I think this couldn't be done in HK or UK stock market.
- solomatov 13y agoI traded in Russian stock exchange and many companies had "preferred" stocks which didn't have voting rights. Usually, they are traded substantially lower than "normal" stocks.
- slowjoe 13y agoPreferred stock is actually a form of debt. It gets paid after the bond-holders but before the shareholders. It almost never carries voting rights.
- tim_sw 13y agoThis is one reason why Alibaba is listing in the US instead of HK http://www.bloomberg.com/news/2014-03-16/alibaba-to-start-process-of-filing-for-u-s-initial-offering.html http://www.bloomberg.com/news/2014-03-16/alibaba-to-start-pr... 'Hong Kong’s bourse doesn’t allow share classes with different voting rights, as the U.S. does. Such arrangements helped Zuckerberg and Google co-founders Larry Page and Sergey Brin keep control of their companies after they went public."
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- steveplace 13y agoIf you're in GOOG options, it's going to get goofy. http://www.cboeoptionshub.com/2014/03/28/goog-get-ready-next-weeks-split/ http://www.cboeoptionshub.com/2014/03/28/goog-get-ready-next...
- junto 13y agoAlso, if you have a "stop loss" orders then I think it is worth cancelling them. I'm not sure if they are smart enough to pick up on splits.
- rohansingh 13y agoAll stop orders are canceled in case of a split. They will need to be replaced.
- steveplace 13y agoA handful of people ended up with margin calls in the order of six figures because the broker hadn't yet adjusted the contracts. Not fun to wake up to.
- donaldc 13y agoBad news for Google shareholders in the long run. Companies with multiple share classes having different voting rights tend to underperform companies with stock that is one share, one vote. Please note: that doesn't mean Google won't do well, but that on average it's likely to do worse for shareholders than if all stock had the same voting rights. Since someone is sure to ask for a citation, http://irrcinstitute.org/news/multiclass-voting-companies-underperform-riskier_pr_10-02-2012.php http://irrcinstitute.org/news/multiclass-voting-companies-un... It's not the only study that has found this.
- jrockway 13y agoGoogle has had Class A and Class B shares since the beginning; B carrying 10 votes and A carrying 1.
- donaldc 13y agoYes, but eventually they'd have issued enough class A shares to make the class B shares less significant. Now Larry and Sergey can keep their majority votes safe forever. In the long run, to the likely detriment of Google shareholders.
- ericd 13y agoSays who? I'd much rather have long-viewed leaders running the company than a horde of outsiders looking to maximize short term gain and flip their positions. This seems like great news for long term investors.
- raldi 13y agoIf the Class C shares go to whoever held the stock on March 27, why didn't the price drop by half at the open on the 28th?
- jrockway 13y agoBecause the "GOOG" you saw listed was not Google's Class A shares, but rather the price of the Class A shares plus the right to receive a Class C share.
- outside1234 13y agotl;dr: Google is acting like an Asian company and pretending to be a publically owned company while screwing shareholders out of voting rights.
- nodesocket 13y agoBetter article: http://business.financialpost.com/2014/04/02/google-inc-stock-split/?__lsa=9c9b-84d9 http://business.financialpost.com/2014/04/02/google-inc-stoc...
- herokusaki 13y agoSlightly off-topic but why don't more companies have 5 character ticker symbols? They'd probably be easier to recognize.
- adventured 13y agoUntil the late 1990's there were SEC rules governing when you could have three vs four or five letters. You might not be surprised that the origination of the short naming convention was heavily caused by the ticker tape machine (dramatically more convenient in most respects to just enter a short symbol rather than the whole company name).
- lazyjones 13y agoGoogle buying Tesla soon ... Would be a shame though!
- kriro 13y agoI'm assuming they are also planning on buying back a chunk of the A-shares (and will only issue C shares in the future)? Will be interesting how much the price gap between A and C, or in other words the premium on control, will be.
- IgorPartola 13y agoHonest question: why do voting shares get traded at all? In most cases, several specific people will have majority control and will either retain it over time or deliberately give it to someone else. Sure, I can buy up a large portion of the stock, but for the most part, never a majority. So why bother trading voting stock at all? Or am I missing some power that a minority stakeholder can have with, say, 10% ownership?
- gohrt 13y agoNon-voting shares weren't generally accepted 15 years ago. Page+Brin were able to secure 10%-voting shares for the IPO and employee RSUs. Now they have stopped the creation/distribution of new tradable voting shares.
- runamok 13y agoAnyone know the tax implications of this? I have seen splits before but supposedly this was equivalent to a special dividend as the stock's value halves.