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Google Inc. Message Board

  • vasti61 vasti61 Apr 12, 2012 5:52 PM Flag

    PEOPLE ON THIS BOARD DO NOT UNDERSTAND THE STOCK SPLIT

    Let me explain it to you this way..

    If GOOG never had a split then lets say 6 months from now GOOG is trading at 800.

    So 6 months from now your one share of GOOG is worth 800.00 in your trading account.

    NOW lets say for the sake of argument that GOOG split the stock in a traditional way 2:1.
    This gives you 2 shares of GOOG. beacuse of the split GOOG (one ticker symbol) is worth 400.00 each. So you account has 800.00.

    fair enough.

    Now lets look at the new class of shares.

    lets call it GOOGa

    On the day the stock splits, lets say it is trading at 700. That means that you get one GOOGa share that is worth 350 and your original GOOG is 350.

    Now from my example above, lets say that the stock moves up in value to 800.00. For you to realize the 800.00 in your trading account, both GOOG and GOOGa needs to be trading at 400.00.

    But how is that possible? These are TWO SEPERATE ticker SYMBOLS. Yes, they are linked to the same COMPANY, but who in the world would want to buy the non-voting rights of the company if both symbols (GOOG & GOOGa) are the exact same price?

    It's like saying that a knock off shirt is selling for 15.00 and a Pollo shirt is selling for 15.00. And both shirts were made from the same company. Why would you buy the knockoff shirt? What advantage is it to choose the nockoff? There isn't any advantage.

    Therefore demand in this example will go down for the knockoff shirt. And in the same way GOOGa will hardly ever be the same price as GOOG. Therfore you loose value. Perhaps not a lot, but non the less you will have less money in your account, had the split never occured.

    That's how I'm reading this. They are not doing a regular 2:1 stock split. That changes everyting.

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    • The split is not the problem

      They are calling the second share a dividend, but that was our own money to begin with...

      Whose brilliant idea was this?

      Just stupid.

      Just split the stock, then fine but don't call it a dividend. Complete insult

    • People that buy Google common stock today are effectively buying shares with no voting power already, since Larry, Sergey, and Eric have Class B shares with 10 votes each, and together they control ~70% of all votes.

    • You're talking as if nobody new will ever purchase GOOG stock. Why would anyone new want to own the non-voting stock?


      Theory = busted

    • Your theory doesn't settle with the fact that the ability to vote class A shares is not worth anything. Insiders control what the company does via class B stock and I would guess they will for a long time, especially by making this move. Voting GOOG stock has and probably always will be a waste of time. Therefore, the voting rights do not add to the value of the A shares over the C shares.

      Any selling in the C shares will quickly be bought up as A and C are essentially equal products.

    • Another shxx talker.

    • WELL PLAYED SIR

    • Not a chance they will trade anywhere close to par unless GOOG declares an equal divi on both. Large institutional holders will dump their newly issued none voting shares and use the money to buy the voting ones. Until a permenant divi is declared, there is going to be a huge price gap.

    • unlikely as mutual funds won't want to buy nonvoting stock as previously mentioned. You are correct that you will still have same voting power, but this is a stupid split. the nonvoting shares will probably crater since google doesn't pay a cash dividend yet.

    • Guys, it is the same regular stock split. If you own 100 shares of GOOG stock, on the spliting date, you will have 200 shares of Google half of the price each of the current stock price. You still have the same voting right from your original share of stock before they split. The non-voting right stock price is accoording to the regular stock price.

    • i think newscorp two tickers - nws and nwsa is similar...could be wrong... but they are trading closely to each other.

      I think in a volatile company where management is questionable, this would be a big factor - shareholder voting.... but in this case, google mgmt have been holding majority votes anyway and not like shareholders voice were an issue before... still, I don't disregard the voting rights issue, just that it is hardly in play for retailers anyway.

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