Shares of Google-parent Alphabet surged 10% on Tuesday after the company reported stellar fourth quarter earnings and announced a 20:1 stock split, following in the footsteps of tech giants like Tesla and Apple which saw their stocks surge following similar announcements.
Alphabet’s stock jumped 10% and turned positive for the year after reporting better-than-expected earnings, with quarterly revenue of $75.3 billion up 32% from a year ago as the company continues to outperform.
As part of its earnings announcement, Alphabet announced a 20:1 stock split—one of the largest of its kind ever announced by any company—with intentions to split all three share classes of its stock.
Shares of the tech giant have shot up in recent months—they currently trade at over $2,750 per share, roughly doubling their value since mid-2020.
If Alphabet’s stock split, which was announced by its board, wins shareholder approval in July later this year, that will make shares of the Big Tech giant far more accessible to everyday investors.
Conventional wisdom on Wall Street says that stock splits don’t do much: Beyond getting each investor receiving more shares, the value of those holdings—not to mention the value of the company, remains largely unchanged.
But mega-cap companies like Apple and Tesla which announced stock splits in recent years saw huge share price gains in the following weeks that drove up each company’s market value—a sign that this latest split could well boost Alphabet’s value in similar fashion.