Google stock split 2022: What should investors do?

Google Stock Split: What is a Stock Split?

A stock split is when a company divides its existing shares - the number of stocks increases and the price gets reduced - there is no overall impact on the business. 

For example, a stock split of 2-for-1 means that you will receive 2 shares for each share that you already own. If you had 100 stocks before the split, you would own 200 shares when the split process is completed. The overall investment amount remains the same as the price will be divided by two.

Alphabet Stock Split:

• Google announced a 20-for-1 stock split back in February, and it will take effect after the close of trading hours on July 15.
• The stock split will pave the way for the company to enter the Dow Jones Industrial Average. Also, it will become more attractive to retail investors.
• Alphabet is splitting its stock to make its shares more accessible to retail investors, a vital source of capital. 

Should you Google stock buy before or after the split?

Expert views are divided on whether to buy Google shares before or after the split. We have compiled both views for you.

Buy Google Stock before split: One of the main reasons for buying the shares before the split is the potential that investors will bid up the share price in advance of the split. As per historical data, the stocks usually rally in the days and weeks heading into a split. In the last five days, Alphabet stock has rallied more than 8%. Stock splits tend to pique the investor's interest, which in turn, drives the share price higher.

Wait for the split: The new lower price post-split is likely to attract new buyers who were unable to buy Alphabet stock as it trades at $2,300. The stock price will be closer to $115, making it much more affordable for those with limited funds. The stock split doesn’t change any business prospects or future earnings.

Google Share: Recent performance

• In 2021, Alphabet (Google's parent company) outperformed its tech peers.
• However, in 2022, it is in the same boat as its peers - Meta, Amazon, and Netflix amid a bloodbath in the technology stocks.
• Google's share price jumped 65% in 2021, while in 2022, it dropped 20%.

Google Stock: Invest for Growth

If you have not brought the shares, you can still consider buying the stocks. There are still catalysts to drive Alphabet's stock higher in the coming years. There is no second opinion on Google's search dominance - it still has a 92% global market share. It also controls 28% of the world's digital advertising market.

Alphabet has rewarded investors with a gain of 4170% since its IPO in 2004, even after correcting significantly in the recent bear market. As per most experts, Alphabet has a long runway of growth ahead. Investors should focus on the company's strong execution, market dominance, and ongoing potential rather than the vagary of a stock split.

Google Stock: Brokerage View

Bank of America recently cut its estimates for GOOGL stock, citing expectations that the US economy's growth will slow. They have lowered Q2 consolidated net revenue by 1% to $58.2 billion from $58.6 billion and lowered 2023 revenues by 6% to $269 billion. They are lowering Q2 EPS to $24.80 from $25.97 as they cut other income due to potential investment write-downs. For 2023 EPS, the key for valuation, they have lowered estimates by 7% to $121.27 from $129.83 as they assume some expense growth moderation.