A leading technology company is making headlines Wednesday after announcing quarterly earnings and announcing a stock split. Here’s how its last stock split paid off for investors.
What Happened: Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) announced fourth-quarter revenue of $75.3 billion, up 32% year-over-year. The total came in ahead of a consensus estimate of $72.1 billion.
The company also beat estimates for quarterly earnings per share with a total of $30.69 EPS.
Search revenue hit $43.3 billion in the fourth quarter along with YouTube advertising revenue, which hit $8.6 billion.
The strong results from Alphabet led to shares to go higher in the after-hours trading session Tuesday.
Another reason for investor excitement was likely the announcement by the company of a stock split.
Alphabet announced it would do a 20-for-1 stock split, paid out as a one-time special stock dividend for Class A, Class B and Class C shares of the company.
If the stock split is approved, it will be effective with a record date of close of business on July 1, 2022. The dividend will be payable at the close of business on July 15, 2022.
Related Link: Alphabet Q4 Earnings Takeaways: Revenue Beat, 20-For-1 Stocks Split, Record Pixel Phone Sales
The 2014 Stock Split: The last split done by Alphabet was back in 2014 and is noted as one of the most controversial stock splits of the time.
Alphabet announced a stock split in 2012, but instead of a traditional stock split that awards additional shares of the same stock, the split was set to create a new class of shares.
The new class of shares (Class C) came with no voting power, something that led to a lawsuit by shareholders. The lawsuit was settled in 2013 with provisions put in place to reward shareholders if the gap between the value of Class A and Class C shares became too large.
On March 27, 2014, Alphabet split its shares with every shareholder getting a share of Class C for each Class A share they owned.
Share Performance: Shares of GOOG (Class C) traded at a price of $566.44 on March 27, 2014, after the split took place.
A $1,000 investment at the time of the split could have purchased 1.77 shares of GOOG. The $1,000 investment would be worth $5,196.10 today based on a price of $2,935.65 at the time of writing.
Investors who bought shares of GOOG at the time of the last Google stock split have enjoyed a return of 420%, or around 52.5% annually for the past eight years.
Photo by Mitchell Luo on Unsplash
