The twenty-is-to-one stock split move of Google parent company Alphabet is believed to trigger retail buying as witnessed with the same strategy of Nvidia, Tesla, Apple and other giants in recent years. Meanwhile, the report of record quarterly sales surged its share prices by 7.5 percent.
More than two dozen of stock splits were witnessed by S&P 500 companies since 2017. There are various reasons to take the move and an important one is to make the shares cheaper as well as more appealing to retail investors. Analysts point out that a stock split simply gives a psychological effect. High-priced shares lead to lower retail participation while the opposite is witnessed with low-priced shares. Increased retail buying was witnessed with the stock split of Tesla and Apple.
Tesla announced the split of 5:1 in August 2020 and its retail investment was up from $30 million $40 million initially and later to more than $700 million. Apple announced the same with a 4:1 split in July 2020. It is certainly believed the same may follow for Alphabet shares.
The S&P 500 is pregnant with 27 other stocks with share prices of more than $500. A stock split has become less common in recent years. There were 35 stock splits between 2001 and 2007. The number went down from 2008.
The Alphabet share price is now about $150 from $3,000 and it is believed may attract the 30-member Dow Jones, a price-weighted index.
The market value of Alphabet is now about $2 trillion and with this the company is now joining the elite companies Microsoft and Apple in the segment.
Meanwhile, the company announced high quarterly sales and simultaneously its revenue was up by 41 percent to $257.6 billion in the first quarter of 2022.