Currently (2020 October 30), Class A Google stock (GOOGL), which has voting rights, is selling for less than its non-voting Class C stock (GOOG).

This seems backwards.

Why would this ever be the case?

  • For reference, the difference (on the 31st) is $5 on a Class A (GOOGL) price of $1616, or about 0.3%. Comparing a handful of matching dates on Nasdaq's charts (Class A - GOOGL and Class C - GOOG) shows the A shares slightly under the C price by up to $5. This Investopedia page suggests it should be the other way around (C shares cheaper) as OP expects. [cont] – TripeHound Oct 31 '20 at 10:39
  • [cont] I've no idea if it is the cause (or a contributing factor) but this InvestorPlace page mentions possible compensation for holders of non-voting C shares if the price has drifted too far apart "in a year's time". The article is dated Feb 2019, so the year should be up (although COVID may have altered things). – TripeHound Oct 31 '20 at 10:43

Class C's liquidation preference should be above Class A. And as you mentioned, Class C is better protected. If you don't have any voting right to protect yourself, you must have more contractual rights to protect yourself. So security concern is the reason.

This seems indicate that the voting right for each share is less worthy than liquidation preference, at least for this time.

With some googling you could find the top results saying that the bankruptcy probability of GOOG is 1.0% or 2.0%, which is significantly lower than the bankruptcy probability of an average US listed company. GOOGL trades about 0.2%-0.3% higher than GOOG, which seems be taking account of the 1.0% bankruptcy risk. Additionally, during the COVID, the bankruptcy risk of many firms have been increased.

  • What is this "liquidation preference" you are referring to? It doesn't look like Alphabet Inc. is going to liquidate anytime soon. – Flux Dec 18 '20 at 6:12
  • @Flux not at a loss, anyway. If the Class A shareholders decide to liquidate it will be liquidated - but I agree there seems to be little chance of a bankruptcy... – Stian Yttervik Dec 18 '20 at 9:03
  • @Flux According to the latest financial statement, the bankruptcy probability of Alphabet Inc. is 1.0%. Not a big number but not negligible. – High GPA Dec 18 '20 at 10:18
  • For future reference, the "probability of bankruptcy" of Google can be found here: macroaxis.com/invest/ratio/GOOG/Probability-Of-Bankruptcy – Flux May 2 at 22:15

Google buys back class C shares, so as their buy back programme has expanded the value of C shares has risen disproportionality to Class A shares, and will continue to do so as long as they keep buying back only one side of their share class.

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