GOOG vs GOOGL : Which Alphabet Share To Invest In?
Have you ever thought of purchasing shares from Alphabet Inc.? If yes, you would have come across both GOOG and GOOGL. Alphabet Inc. It is the parent company of brands like Google & YouTube. Let’s Find out GOOG vs GOOGL.
If you have been trading or buying stocks, then you might have come across both Tickers GOOG and GOOGL, which represent different shares of the Alphabet. Although both represent Alphabet INC. Stocks, they slightly differ in terms of a few features and prices.
Common publicly traded stocks have different or multiple share classes, and Alphabet is one of them. There can be different reasons as to why companies might prefer different share classes. But most common reasons. However, the biggest one among them is for the founders and the stakeholders to maintain control over the organization.
Reasons Why Companies Use Different Share Classes
Google became a public company back in 2004, and it issued Class A and Class B shares. The Class A shares were issued to the public with one vote/share. The Class B Shares came with 10 votes/share for maintaining company control.
However, more Class A shares were issued over time, which diluted the control of the founder, prompting a stock split in 2014.
This split caused the already existing (Class A and Class B Share) shareholders to hold the Class C shares. These are the nonvoting shares for every single existing share they held. Because of these nonvoting shares
Thanks to these nonvoting shares, Alphabet’s management could issue extra shares or liquidate new ones without affecting the founders’ control.
Initially, there was widespread criticism about the Class C shares. Gradually, however, the market accepted the three-class structure of Alphabet Inc. shares. This resulted in Class A and Class C structures.
This resulted in the Class A and Class C shares trading almost in sync with each other. Also, the nonvoting class C shares traded at Premium at times. However, as an investor, you must know that Class B shares are not publicly traded.
GOOG vs GOOGL: Similarities & Differences
So, you must already have an idea that Alphabet Inc. has two different types of shares. There are two different ticker symbols for these shares as well. GOOG and GOOGL represent two different types of shares.
GOOG, as a ticker symbol, represents Class C shares. On the other hand, GOOGL, as a ticker symbol, stands for Class A shares. The Class C shares had no voting rights.
On the other hand, the company restructured itself and came under a corporate name which is Alphabet, in 2015. This did not change the three shared classes of the Alphabet.
Once more, there was another 20-for-1 stock split, which happened in 2022 but did not change the company’s share. As of its 2022 fiscal year earnings report, Alphabet reported 6.88 billion shares of Class A stock outstanding.
All three share classes of the Alphabet and have similar economic interests in Alphabet. It means that the earnings of Alphabet get equally attributed to each of the Alphabet shares despite the share classes they are from.
GOOG vs GOOGL: Do Voting Rights Have Any Effects on Investors?
Shareholders with voting rights are significant to a company. These individuals can vote for shares they hold and affect major company decisions. Shareholders who can vote on shares can affect different decisions, like the election of board members of a company. They can also affect mergers and acquisitions and impact business.
Also, shareholders can empower the shareholders and potentially hold the management accountable for any actions. They can show their views and perspectives and share how their proposals align with the values and interests of the company. Companies must hear the proposals of shareholders who have voting rights.
However, some of the companies themselves hold major stakes in the company. This gives them higher power over the rest of the shareholders when it comes to making decisions. Sometimes, the shareholders may also not want to impact the company’s voting rights. Also, many shareholders also don’t have enough shares to make any impactful decisions.
The value of the right to vote depends on one person or different individuals and their objectives and priorities. A specific circumstance for a company also dictates the right to vote for the shareholders.
GOOG vs GOOGL: Which One Is Better For Investment?
The answer to this question has much to do with an investor’s values and priorities. The Class A and Class C shares represent the same level of value. However, the Class A shares allow investors to have voting rights on the company board. Many investors are often tempted to pay a premium to get Class A shares, which also gives them certain voting rights.
While many might enjoy the authority one has in terms of voting, some think that investing in GOOGL and paying a premium is pointless.
The Class B stocks are not publicly listed. These shares are also listed. Some of these shares are owned by the founders, the management team of the company, and the like. Now, this class of stock represents a minimum percentage of the entire company’s stock. Each member of class B shares 10 votes.
There are ten votes for each of the Class B shares, and their shareholders have significant control over a company’s decisions. According to Alphabet’s proxy statement in 2022, insiders had 52.6% of the voting power of the company.
The founders, Larry Page and Sergey Brin don’t have the majority of stakes in Alphabet, but they still have enough voting power through the Class B common stock holding. This means that they have efficient control over Alphabet. So, now that you know the nature of these Share classes, you should have an idea of whether to invest in them or not.
Final Words
Although Alphabet has been under different consecutive attacks, Alphabet offers lucrative investment opportunities through GOOG and GOOGL stocks. However, the different new services of Alphabet and their constant evolution make Alphabet a lucrative opportunity for investment.
Hopefully, this article answers your query. If you have any additional questions, please let us know. Thank you for reading.
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Shahnawaz Alam
Shahnawaz is a passionate and professional Content writer. He loves to read, write, draw and share his knowledge in different niches like Technology, Cryptocurrency, Travel,Social Media, Social Media Marketing, and Healthcare.
