5

So Google split its stock in 2014 2 for 1. Everyone with a Class A share got a Class C share.

Supposedly this meant that the price of each share was halved so that it would be easier for new investors to buy shares. However when you look at the graph of Google's share prices there is no halving. Google's class A share price did not go down at all in 2014. Looking at it here: https://www.nasdaq.com/market-activity/stocks/googl

It seems as though Google doubled its market cap overnight in 2014 when the stock split. When you calculate Google's market capital now you have to use the price of the class A shares combined with Class C or about $5300. see my other question:

I calculated Google's IPO valuation using this chart and the result doesn't match the value on Wikipedia

So what is going on here and what am I missing in the graph of google's share price?

2
  • 15
    Graphs like that are usually adjusted for stock splits. That way, they show the trend without the artificial effects. Jan 29, 2022 at 13:55
  • See 2nd and 3rd April 2014 snapshots for a clearer view of that. The stock price did halve, but it would make the graphs look strange if they didn't take that into consideration so the graphs are re-calculated based on if the stock had always been split Jan 31, 2022 at 9:47

1 Answer 1

25

A stock split has no effect on corporate metrics, market stats, shareholder equity, etc. The only things that change are the number of shares outstanding, share price, and the amount of dividend paid per share (if there is one).

If a company effects a two for one split, you end up with twice as many shares at half the price with each share paying half the previous dividend.

Because share price has been altered by the stock split, historical prices are adjusted to reflect the stock split and therefore, they do not appear on price charts unless you are using a charting service that gives the option to view unadjusted share prices.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .