Alphabet’s GOOG vs. GOOGL: What’s the Difference?

What is the difference between Alphabet’s GOOG and GOOGL?

GOOG and GOOGL are stock symbols for Alphabet (the company formerly known as Google). The main difference between GOOG and GOOGL stock symbols is that GOOG shares do not have voting rights, unlike GOOGL shares.

The company has created a new to classify of non-voting shares in April 2014 and issued one Class C share for each Class A share previously held by shareholders. Any person who held A shares at the time of the divide received an equal number of C shares, but their voting power did not increase. The action preserved majority control of the founders Google-shareholders-goog.asp” data-component=”link” data-source=”inlineLink” data-type=”internalLink” data-ordinal=”4″>Larry Page and Sergei Brin. When companies go public, founders often lose control of time as equity offerings and additional sales leave them in the minority.

Alphabet’s founders are determined to maintain control of the company, a goal shared by other tech moguls. Markets and investors can be myopic in their insistence on immediate results, even at the expense of a long-term strategy. The stock split enabled Brin and Page to take advantage of the public market liquidity while retaining majority control of the company.

Key points to remember

  • Alphabet, Google‘s parent company, has two listed stock classes that use slightly different symbols.
  • GOOGL shares are its Class A shares, also known as common shares, which have the typical structure of one share, one vote.
  • GOOG shares are class C shares which do not confer any voting rights.
  • Due to their voting rights, A shares may trade at a premium to C shares; however, in reality, the prices of the two are often quite close to each other.
  • There is a third type of shares, Class B shares, which are held by founders and insiders and carry 10 votes per share. Class B shares cannot be listed on a stock exchange.

What is the difference between GOOG and GOOGL?

Google‘s parent company, Alphabet, announced a 20-to-1 stock split in February 2022. The split took effect on July 15, 2022.

GOOGL

GOOGL stocks are classified as Class A Shares. Class A shares are called common shares. They give investors a stake and, usually, voting rights. This is the most common type of action.

GOOG

GOOG shares are the company’s class C shares. Class C shares give shareholders an equity stake in the company, just like class A shares, but unlike common shares, they do not give shareholders voting rights. Therefore, these shares tend to trade at a modest discount to Class A shares. These Class C shares should not be confused with the type of C-Shares issued by some mutual fund.

There is also Class B shares carrying 10 votes per share, but these are held only by founders and insiders and are not publicly traded.

A summary of class structures:

  • Class A: Owned by a regular investor with regular voting rights (GOOGL)
  • Class B: Owned by the founders, with 10 times the voting power of Class A shares
  • Class C: No voting rights, generally held by employees and certain class A shareholders (GOOG)

Special Considerations

Often, activist investors unite and accumulate stock to push companies to adopt shareholder-friendly initiatives that boost share prices, such as cost cutting, share buybacksand special dividends. This process can turn hostile, with activists engaging in public battles to win board seats and wrest control of the company from management. After issuing non-voting shares to retain majority control, Page and Brin need not worry about the possibility.

In 2017, S&P Dow Jones Indices announced that it would no longer add companies with multiple share classes or limited shareholder rights to its most popular indices, while acquired rights in those already included.

Why is GOOG more than GOOGL?

Since A shares have more voting rights and these rights have some value, they often trade at a slight premium. In reality, GOOG and GOOGL often trade around the same price. For example, on August 1, 2022, GOOG shares opened at around $115.53 and GOOGL at $115.30. Sometimes one share class will trade at a relative premium to the other, but due to arbitrage opportunities these spreads will often close over time.

What is the difference between GOOG and GOOGL?

The two different classes of stock (GOOG being Class C and GOOGL being Class A stock) are intended to preserve control of the company by Google‘s founders and early investors after the company reorganized under the name of Alphabet Inc.

What are Alphabet’s Class B Shares?

Alphabet also has a class of B-shares which belong only to insiders, and which are not traded on an exchange. The B shares are thus held by Brin, Page, Schmidt and a few other directors. Unlike A shares which confer one vote per share, shareholders of B shares have 10 votes.

The essential

There is certainly a difference between the price of the two types of Google-good-investment/” data-component=”link” data-source=”inlineLink” data-type=”internalLink” data-ordinal=”1″>Google shares that you can buy, although it is relatively small. If you think voting at the general meeting is important to you, aim for A shares.

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