Google proposes stock split to make shares more accessible

2 Feb 2022

Image: © Sundry Photography/Stock.adobe.com

As Alphabet broke the $200bn mark in annual revenue for the first time, the company announced a stock split.

Google parent company Alphabet has announced a stock split that will make each share more affordable for individual investors.

The 20:1 stock split means that existing shareholders will get 19 additional shares for every share they own, each worth less than before. If the stock split gets shareholder approval in July, it will lower the price of each share and increase the company’s total share count.

Future Human

Stock splits don’t affect the value of an investor’s holding but can make the purchase of shares more accessible. Google had a 2:1 stock split in 2014 before becoming Alphabet, and Apple and Tesla have recently made similar moves to make shares more affordable for individual investors.

The stock split was announced during the company’s fourth-quarter earnings report, where it outperformed revenue expectations with growth driven by cloud and advertising.

Revenue in the fourth fiscal quarter of 2021 was $75.33bn, up 32pc from the same period in 2020 and higher than Refinitiv expectations of $72.17bn. For the full year, revenue stood at $257.64bn, up 41pc from 2020 and breaking the $200bn mark in annual revenue for the first time.

Sundar Pichai, chief executive of Alphabet and Google, said yesterday (1 February) that the company’s substantial investment in AI technologies “continues to drive extraordinary and helpful experiences for people and businesses” across its products.

“Q4 saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our cloud business continuing to grow strongly,” he said.

The growth in Google Cloud revenue echoes the cloud growth reported by Microsoft last week, driven by people shifting to remote and hybrid work.

According to CNBC, Google stock saw a 65pc surge in 2021, placing it ahead of other Big Tech companies and more than tripling its gains in the S&P 500 index. The company’s share price increased by more than 9pc in extended trading after the quarterly earnings report yesterday.

Ruth Porat, chief financial officer of Alphabet and Google, said that fourth-quarter revenues “reflected broad-based strength in advertiser spend and strong consumer online activity, as well as substantial ongoing revenue growth from Google Cloud”.

Google ad revenue stood at $61.23bn in the full year – significantly higher than the $46.2bn in 2020. Google Cloud revenue was up by almost $2bn to $5.54bn. While YouTube ad revenue also rose to $8.63bn, it fell short of the $8.87bn expected by StreetAccount.

Alphabet now employs 156,500 people, up by more than 20,000 on the 135,301 figure in the same period in 2020.

Another potentially major announcement on the earnings call was Pichai suggesting he has his eyes on blockchain and how it could help Google and Alphabet.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com