Google Stock Split: Time to Buy Stock?

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Google Stock Buy Signal - April 3, 2014

After months of waiting, Google (GOOG) is finally announcing its 2-for-1 split tomorrow April 2. Shareholders recorded as of March 27 will get two shares for every one owned, encouraging a lot of investors to buy stock last month.

One set of shares under the Class A classification will be under the ticker GOOGL while the other set of shares under the Class C category will stay in the company’s original ticker GOOG. Analysts see this change as a strategy for owners Larry Page and Sergey Brin to manage the tech company.

Of course GAAP rules state that stock prices will be half of their price prior to the split and that Google will have twice as many outstanding shares, opening up the opportunity for new investors to buy stock. Founders Larry and Sergey are owners of the Class B stock, which are not traded publicly, but they are also entitled to Class C shares for every stock they own after the split.

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Opportunity to Buy Stock of Google?

Stock market analysts also warned investors that this doesn’t necessarily give the public more control on the tech company, but more of a “founder move” designed to give the company more flexibility. The stock prices of GOOG and GOOGL can behave differently, depending on how the particular aspects of the firm perform. This can also help the founders manage M&A deals and stock incentives.

Other market participants remarked that this is a strategy for the company to make its retail stock more accessible to the public as a way of encouraging traders to buy stock of Google. For short-term investors, it might be a chance to add shares as price is expected to drop in the coming days, but the long-term recommendation of most analysts is still to buy and hold these shares.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com