Google parent Alphabet announced a 20-for-1 stock split on Wednesday, which would create a stock currently valued at around $US1,050. On the news, Alphabet shares closed at $US1,082.50, up around 3%. Alphabet is the parent company of Google, which is the world’s most valuable company. Shares in the company were on a tear in 2017, up about 40% year to date.
On Wednesday, Asian companies were among the biggest gainers in the U.S. following Alphabet’s stock split news.
Japan’s Nikkei 225 rose almost 2% to close at 27,533.60, while South Korea’s Kospi rose 0.9% to 2,064.03. Australia’s S&P ASX 200 rose 0.7% to 5,510.30.
Shares in Europe also rose on the news, with Germany’s DAX up 1.3% and the U.K.’s FTSE up 1.2%.
Alphabet explains the idea of the 20-for-1 stock split
The company said its board approved plans for a stock split as part of its quarterly earnings statement. Alphabet stock climbed more than 10% in after-market trading following the news.
The move comes 15 months after Apple most recently split its stock. It gave three shares for each share that people owned. Alphabet and Apple are among the technology companies that extended their market capitalizations into the trillions. It happened as investors opted for profitable growth.
According to the earnings statement, Alphabet plans to split the stock’s shares (Class A, Class B, and Class C). The change demands shareholder approval. At the close of business, each shareholder will receive additional shares for each share of the class of stock they hold.
In 2012, Google added Class C with no voting rights. The company has Class A shares carrying one vote per share. Founders and early investors hold Class B shares and carry ten votes. The company maintained this stock structure when it rebranded to Alphabet in 2015.
Google’s founders emphasized several topics in a letter that included the prospectus for Google’s initial public offering. They said they would always act with the company’s long-term interest and shareholders in mind.
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