On Thursday 02/01/2022, Alphabet(NASDAQ:GOOGL), the parent company of Google, reported earnings. The quarterly report card looked great. The business generated $75.3 Billion in sales and $20.64 Billion in profits – an increase of 32% compared to the same quarter last year.
With that said, the news that blew most people away (or maybe it was just me) was the announcement that the business will do a 20:1 stock split effective July 15th, 2022.
What the heck does that mean? Here’s the short story:
Let’s say you currently own one share of Alphabet worth $2,860. After the 20:1 stock split goes through, you’ll have 20 shares worth ~$143 each. Simple math: 2860/20=143
Absolutely nothing changes about the fundamental value of the business or the investment.
A split simply makes the stock price more “affordable” for new investors and anyone that wants to buy.
If I own Alphabet stock, do I need to do anything?
If you already own the stock, there’s nothing for you to do. You’ll notice the change in your investment account once the split goes through in July of 2022.
Why are they doing this?
The company did not specify. However, one of the main reasons why *some* publicly traded companies decide to do this is because the stock price has gotten relatively expensive. And so, by doing the split, they give access to more people to invest in the company.
If I am interested in buying the stock, should I wait until after the split?
First of all, you should never invest in a company “just because” they are doing a split. That should never be your only reason.
With that said, if Alphabet is a stock you’ve been waiting to buy for many years and felt the price was “too high,” the split can present an excellent opportunity to grab some shares.
However, it doesn’t matter if you get them now or wait until after the split. It will boil down to this:
If you have ~$2,860 right now, you can go ahead and buy one single share. Once the split goes through, you’ll have 20 shares worth ~$143 each.
If you don’t want to allocate over $2,800 of your money to Alphabet stock, you can wait for the split and grab how many shares you want at the cost of ~$143 each – or whatever the price will be at that time.
Keep in mind that the stock price might be much higher or lower than what it is right now by the time July rolls around. No one has a crystal ball!
The price per share after the split will depend on whatever price the stock is then.
Let me know if this makes sense! =)
And that’s all folks! Thank you for reading. If you enjoyed this post, click “like” and/or leave a comment. Also, if you have any questions let me know below.
You can always reach me at firstname.lastname@example.org.
Cheers to HEALTH and Profits!
Courses & Resources
Not yet investing but want to get the ball rolling asap? I highly recommend you check out the Beginner Investor Starter Pack®. The bundle includes books and resources that will teach you the basics of investing and how to get starter on the right foot.