Alphabet Inc. is finally cutting into its huge stock price with a stock split, leaving only one Big Tech company with a huge per-share price even though it has an easy way to change it.
For example, Apple Inc. AAPL, -0.10% split its stock many times in the iPhone era to keep the price low enough to be on the blue-chip Dow Jones Industrial Average DJIA.
Because the company that is mostly known as and makes up Google has only had one other stock split in its history.
Google’s previous split in 2014 was very different. It was used to create a new class of stock that didn’t have voting rights, which was a way for co-founders Larry Page and Sergey Brin, who own class B supervoting shares, to keep control of the company. When Google became part of a company called Alphabet, the class A shares traded under GOOGL, +1.73 percent. The class C shares traded under GOOG, +1.61 percent, changed at the same time.
There’s more to it than you think. There was a lot of confusion for Google investors when the company split up its stock. Alphabet’s class A shares have jumped about 336 percent since the split, which didn’t lower the price of each share because that wasn’t what was meant.
Wall Street was surprised when the stock rose again in after-hours trading on Tuesday, but that was more likely because the company had a great holiday quarter that beat expectations. Shares rose more than 9% in after-hours trading, with each trading class-topping $3,000 and putting a $2 trillion market value insight.
This is what would happen if Alphabet shareholders agreed to the stock split: Only Amazon.com would be left in the “Big Tech” club. Amazon hasn’t split its stock, even though it doesn’t have the same problems with its stock structure as Google. This has led to rumors that the company was thinking about splitting off its cloud-computing business, Amazon Web Services.
With AWS CEO Andy Jassy taking over the mothership last year, that doesn’t look like it will happen. So, Andy, what’s the holdup? After all, a split could make you a blue-chip company on the Dow.
Dow chose Salesforce.com Inc. CRM, -0.22% as a tech company instead of Google or Amazon, both of which have lower per-share prices. They don’t want to put too many tech companies in the Dow, but there are already some that look more like low-growth silver hairs than solid blue chips. IBM IBM, +1.47% is one of them.
Also, Alphabet or Amazon could take the place of Intel or Cisco Systems because they are growing more quickly than they did before.
In the past, Big Blue has been the face of tech in the Dow. Amazon and Google are now the big players in tech, along with Apple and Microsoft, which are both in the Dow right now. Another change could be in the works. One has already cut its per-share price, and another is almost there.