How to handle the GOOGL/GOOG split in StockMarketEye
Google stock splits once in a while. At least that seems to be the case now, after it happened for a second time in July, 2022.
So, when is the next Google stock split and how does it affect your holdings? Let’s look at what exactly happens during these rare events, how they affect your portfolio, and how to handle them in Stock Market Eye.
When Does Google Stock Split?
Google stock has only split twice so far since they went public in 2004. Both times were to make Alphabet shares more attainable to retail investors. While the two instances differed a bit from each other, the end result was more shares in the market at a lower price point.
On April 3, 2014, Google stock split for the first time when they implemented a special dividend. This affected all owners of their Class A shares on the date of record (March 27, 2014).
GOOG vs GOOGL
In effect, the dividend splits the value of Google’s Class A shares (voting shares) essentially in half and issues a new class of shares, Class C (non-voting) shares. For every 1,000 shares of Google Class A (pre-dividend symbol, GOOG) you owned on the date of record, you would receive 998 of the new Class C shares.
The ticker symbol for the Class A shares changes to GOOGL (from GOOG) and the new Class C shares will trade under the old GOOG symbol.
Google’s second split happened on July 18, 2022. This time around GOOGL split 20 to 1, so you got 20 shares for every 1 share you owned on the date of record (July 15, 2022).
When is the Next Google Stock Split Date?
No one knows when the next Google stock split is going to happen for certain. Based on their history we can assume it won’t be anytime soon. The first one took ten years, and the next one happened another 8 years after that.
Will the price of shares build up more quickly and give us a 6 year split date in 2028? Maybe, they will hold off a bit longer this time and we won’t see another divide until 2030 or later. Only time will tell.
Effects of a Google Stock Split on Your Holdings
All of this may all sound quite complicated, but let look at an example to see that it’s not really so bad.
The 2022 Split
The recent split was pretty straightforward. For every share you held on July 15th 2022, you would have 20 shares on July 18th. The value of those shares would be exactly 1/20th what they were before.
For example, if you had a single share of Google worth $2,000, you would now have 20 shares, each worth $100.
The First Split Was More Complicated
Let’s say that you owned 20 shares of GOOG on March 27, 2104.
On the date of execution, April 3, those 20 shares would change their symbol from GOOG to GOOGL. On that date, your account would also show 20 of the new Class C shares trading under the symbol GOOG.
This table summarizes those changes:
|April 2||April 3|
|Class A Shares||GOOG||20||GOOGL||20|
|Class C Shares||–||–||GOOG||20|
Effects on Cost Basis
This is where the 1,998 to 1,000 split gets a little more detailed.
According to Google’s IRS filing, 50.08% of the cost basis on the first day of trading (April 3, 2014) will go to the Class A shares (GOOGL) and 49.92% will go to the Class C shares (GOOG).
So, in our example above, let’s say that the cost-basis of our original 20 Class A shares was $1000 per share. On April 3, the cost-basis of our Class A shares (GOOGL) would be $500.8 and for the Class C shares (GOOG) would be $499.2.
|Class A Shares||1000||50.08%||500.8|
|Class C Shares||–||49.92%||499.2|
How to Record The Google Stock Split in StockMarketEye
To enter a standard stock split, like the recent one in 2022, you would find “Split stock…” under the portfolio menu and click to open the window. From there, you simply enter the date and split ratio and click ok. You have the option to leave a comment here.
You’d Treat The First Google Split as A Corporate Spinoff
Since the release of StockMarketEye v3.3, you can record this using the Corporate Action transaction. Corporate Action transactions are for recording things such as spin-offs, which are very similar to what Google has done.
Here’s what you need to do in StockMarketEye:
The first thing is to go into your portfolio, locate your Google holding and change the ticker symbol from GOOG to GOOGL. You can read the detailed steps for changing a ticker symbol in our User’s Guide. Be sure to click the button, “Change All Items and Transactions With The Same Symbol” at the end.
In the Corporate Action window, first set the “Date” to be April 3, 2014.
Then set the “Cost Basis Change (%)” to 50.08. Leave the “Shares Change (%)” as 100.
Click “OK” in the Corporate Action window to record the transaction. This will adjust the cost basis of your original GOOGL holding (in the Prices view of your portfolio) by 50.08% and you’ll see a new “Corporate Action” transaction in the Transactions report. Note that the purchase price and total value of the original GOOGL “Buy” transaction have not changed.
In the Enter Purchase Details window, change the “Date” to be April 3, 2014. Then change the “Type” selection to “Shares In”.
Change the “Cash Balance” to be “Do not update”. This is required for proper performance calculations.
Then in the “Quantity” field, enter the same number of shares as in your GOOGL holding.
In the “Price” field enter the original purchase price of your GOOGL shares (pre-split price) times 0.4992. So if your original purchase price was $1000, enter 499.2 in the “Price” field. If your original purchase price was $400 per share, enter 199.68 in the “Price” field.
“Commissions” and “Fees” should be 0.
Click “OK” to add the GOOG shares.
And you’re done. You investment in Google is still worth the same as before, but it is now split across GOOGL and GOOG according to the 50.08/49.92 ratio.
Prepare for a Google Split Down the Line
The recent split brought Google shares down to a very attainable near $100 price point. Now let’s hope to see GOOGL and GOOG touch $1000 per share again soon!
(Full disclosure: I own shares of GOOGL and GOOG)