This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Google Is Splitting Its Stock

NEW YORK (TheStreet) -- Google (GOOG - Get Report) is splitting its stock so that it can issue Class C shares, which won't have any voting rights, as opposed to Class A shares, which carry one vote per share, and Class B shares, which get 10 votes per share.

Google has issued Class A shares to pay employees and finance acquisitions. That was diluting the Class B voting rights, which meant the voting rights of Larry Page and Sergey Brin, the company's founders, who have a combined 56% of the voting rights, a percentage that was shrinking fast because of the heavy issuing of new Class A shares.

With the stock split, due to take effect on Wednesday, Google can issue Class C shares without worrying about Class B share voting power dilution. The current shares will be split into one share of its original kind (Class A or Class B) and one Class C share so that each shareholder will have the same number of votes as he did before the split.

The S&P 500 intends to keep both the old and new Google shares in its index, causing the S&P 500 to have 501 components. That has never happened before. 

In February, the S&P 500 was considering having Google trade its Class A and Class B shares under the new ticker GOOGL, while using GOOG for the Class C shares and keeping only the GOOG shares in the index. The S&P 500 ended up keeping them all under GOOG and keeping them all in the index.

With Google's lower stock price, I will be excited to jump in and maybe do a little Google trading. Even though $600 is still a high price for a day-trading stock, Google's trader sentiment is always clear and the stock is volatile, which makes me tempted to trade it.

At the time of publication, the author had no position in the stock mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GOOG $750.26 0.28%
AAPL $117.81 -0.19%
FB $105.45 0.04%
TSLA $231.61 0.86%
YHOO $32.94 -0.66%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs