Google shares coming to masses; set to follow in Apple, Tesla footsteps

tech.hindustantimes.com:

Alphabet Inc. is bringing big stock splits back to the market, so prospective buyers won’t need upwards of $3,000 to own a share. Taking down the price achieves something else for the Google parent: making it possible to put America’s third-biggest company into its most venerated stock average. Share splits have nearly disappeared from the U.S. stock markets recently, with only two in 2019 compared with 47 splits in the S&P500 in 2006 and 2007. But Apple Inc. and Tesla Inc, brought it back to attention after they split their stocks in 2020.

The company said late Tuesday it will increase its outstanding shares by a 20-to-1 ratio, aiming to entice the numerous small investors who have flocked to the stock market during the pandemic. 

“The reason for the split is it makes our shares more accessible,” Ruth Porat, Alphabet’s chief financial officer, said in a conference call with television anchors. “We thought it made sense to do.”

For mom-and-pop traders, a lower stock price makes it easier to buy shares rather than purchase fractional stocks through their brokerage firms. Alphabet’s 20-for-1 split would reduce the price of Class A shares to roughly $138, based on Tuesday’s closing price of $2,752.88. A share of the company hasn’t been that cheap since 2005.

“Institutional investors can buy in size and the price per share doesn’t matter,” said Ed Clissold, chief U.S. strategist at Ned Davis Research. “But for a smaller investor, a lower price-per-share makes it easier for them to buy a reasonable number of shares.”

Another motivation could be gaining entry to the Dow Jones Industrial Average, whose price-weighted index has been a barrier for years to the likes of Alphabet and also Amazon.com Inc., which has a four-figure stock