Google's Unusual Stock Split

On April 3, Google (NASDAQ: GOOGL  ) will finally go through with its 2-for-1 stock split, which has been two years in the making. With the incredible run Google has had since it went public, its shares are now trading for well over $1,000 apiece, so a split makes sense at these levels. But Google's will be no ordinary stock split.

On Friday's edition of Stock of the Day, host Erin Kennedy and Motley Fool analyst Brendan Mathews take a look at what makes this split unique. Google will essentially be offering a stock dividend, creating a new class of shares called Class C and issuing one Class C share for every share of Class A or Class B that shareholders currently own. Class A shares carry one shareholder vote, Class B carries 10, and Class C shares have no voting rights. The reason for the new Class C shares was to be able to split the stock without further diluting the voting rights of Google insiders, who own the bulk of Class B shares.

So should investors be concerned about this abnormal split? Brendan doesn't think so. While it may not be the most shareholder-friendly move, he trusts Google's leadership to manage well on behalf of shareholders and isn't particularly concerned here.

Where else is Google going from here?
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


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  • Report this Comment On March 29, 2014, at 2:41 AM, emilyrobins wrote:

    Google is strategically positioned to grow in several directions with its diversified portfolio. It is still valued fairly cheaply, compared to the new companies on the block, and the analysts recommend the company as a buy.

  • Report this Comment On March 29, 2014, at 4:20 AM, hennrymark70 wrote:

    Google has traded at an average price to earnings multiple of 22.8x in the last five years. Currently, its forward price to earnings is 20.3x, which is an 11% discount to its historical average. Google is also trading at a 38% discount to its competitors’ average price to earnings of 33x

  • Report this Comment On March 29, 2014, at 5:32 AM, annaarron wrote:

    Google’s stock is up 280% in the five years to date, powered by its strengthening position in the online ad market.

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