Google Stock Split: In Larry And Sergey We Trust Comment Now Follow Comments In anticipation of Google GOOG -2.93%’s stock dropping by 50% on Wednesday (due to its 2 for 1 stock split) it is worthwhile to understand what this means to shareholders. (Update: The new non-voting Class C shares symbol is the original GOOG and is trading about $1 less than the original one vote per share Class A shares with symbol GOOGL. Both shares are up about $15 or 2.7% this morning). Stock splits have historically been used to decrease the amount an investor would have to spend in order to buy a “round lot” or 100 shares. This was important when brokerage firms made it more expensive to buy fewer than 100 shares or an odd lot. However, since it essentially costs $8.95 or less from most on-line brokerage firms whether you buy one share at $1,135 or 100 shares at $11.35 the investor doesn’t need a stock split to invest $1,135 in Google and get the same return when the shares increase. Another reason stock splits have been done is for management to show they believe the company will do well in the future. Overall these don’t change the financials (except EPS will be half of what it was) and in theory the overall value of a company is not affected except when investors are willing to place a higher valuation metric on future earnings. It makes everyone “feel good”.
Posted on: Mon, 13 Oct 2014 06:23:05 +0000
Trending Topics
Recently Viewed Topics
© 2015