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What Does Google’s Stock Split Mean For Investors?

For the second time in its history, Google’s parent company, Alphabet (GOOGL) (GOOG)is set to split its stock for the second time in its history.

The 20-to-1 split means Alphabet investors will receive an additional 19 shares for each one they already own. It will be the company’s first stock split since April 2014, when it split its shares 1,998 for 1,000.

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Google stock split date

The Google stock split is expected to take place after the market closes on July 15.

Alphabet’s stock split and what it means

The split won’t affect Morningstar’s senior equity analyst Ali Mogharabi’s view of the company, which he values ​​at $3,600 per share. After the spin-off, the estimate of the company’s fair value will be adjusted to $180 per share to account for the 20-fold increase in the number of outstanding shares of the company.

Alphabet’s broad economic ranking, which means the company has a competitive advantage, will not be affected by the split.

This means the company will remain a 4-star rated stock after the split, trading at a 36% discount from July 11.

Mogharabi says the stock’s performance was driven by concerns about slowing economic growth and the potential for reduced advertising spending, which could impact companies dependent on ad revenue like Alphabet.

“But digital ad spend is probably a little less impacted than overall ad spend,” he says. Mogharabi sees three factors contributing to the company’s rise.

“Alphabet still has room for Maps monetization on YouTube. Also, the cloud business will continue to do well,” he says.

“Alphabet dominates the online search market with a global Google share of over 80%, driving strong revenue and cash flow growth,he says. We expect continued growth in cash flow from the business as we remain confident that Google will maintain its leadership in the search market. “

Upcoming stock splits

Alphabet is one of several tech and consumer companies that decided to split their shares this year. Amazon e-commerce platforms (AMZN) and Shopify (SHOP) have already split their shares. The next big name is Tesla (The TSLA) , which plans to vote on a 3-to-1 split at its annual meeting on Aug. 4. If passed, it will be the electric vehicle maker’s second stock split in three years.

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