How to handle the GOOGL/GOOG split in StockMarketEye
Posted on Tuesday, Jun. 3rd 2014
On April 2, 2014, Google Inc. implemented a special stock dividend. The dividend looked very much like a stock split and affected all owners of their Class A stock on the date of record, March 27.
In effect, the dividend splits the value of Google’s Class A shares (voting shares) by half and issues a new class of shares, Class C (non-voting) shares. Anyone who owned Google Class A shares (pre-dividend symbol, GOOG) on the date of record (March 27) would receive an equal number 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.
This may all sound quite complicated, but let look at an example to see that it’s not really so bad.
Effects of GOOGL/GOOG on your Holdings
Let’s say that you owned 20 shares of GOOG on March 27.
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 be credited with 20 shares of the new Class C shares trading under the symbol GOOG.
This table tries to summarise those changes:
April 2
April 3
Symbol
Shares
Symbol
Shares
Class A Shares
GOOG
20
GOOGL
20
Class C Shares
–
–
GOOG
20
Effects on Cost Basis
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.
Example
CostBasis/Share
April 2
Percentage
Example
CostBasis/Share
April 3
Class A Shares
1000
50.08%
500.8
Class C Shares
–
49.92%
499.2
How to record this in StockMarketEye
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 your portfolio, select the GOOGL holding and then click on the menu: Portfolio -> Record Corporate Action… This will open the Enter Corporate Action Details window.
-
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.
-
Now we need to add the shares of the new GOOG holding we received. Click on the “Buy Stock” button in the portfolio’s toolbar.
-
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.
Now, let’s hope to see GOOGL and GOOG touch $1000 per share again soon!
(Full disclosure: I own shares of GOOGL and GOOG.)
On April 2, 2014, Google Inc. implemented a special stock dividend. The dividend looked very much like a stock split and affected all owners of their Class A stock on the date of record, March 27.
In effect, the dividend splits the value of Google’s Class A shares (voting shares) by half and issues a new class of shares, Class C (non-voting) shares. Anyone who owned Google Class A shares (pre-dividend symbol, GOOG) on the date of record (March 27) would receive an equal number 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.
This may all sound quite complicated, but let look at an example to see that it’s not really so bad.
Effects of GOOGL/GOOG on your Holdings
Let’s say that you owned 20 shares of GOOG on March 27.
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 be credited with 20 shares of the new Class C shares trading under the symbol GOOG.
This table tries to summarise those changes:
| April 2 | April 3 | |||
|---|---|---|---|---|
| Symbol | Shares | Symbol | Shares | |
| Class A Shares | GOOG | 20 | GOOGL | 20 |
| Class C Shares | – | – | GOOG | 20 |
Effects on Cost Basis
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.
| Example CostBasis/Share April 2 |
Percentage | Example CostBasis/Share April 3 |
|
|---|---|---|---|
| Class A Shares | 1000 | 50.08% | 500.8 |
| Class C Shares | – | 49.92% | 499.2 |
How to record this in StockMarketEye
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 your portfolio, select the GOOGL holding and then click on the menu: Portfolio -> Record Corporate Action… This will open the Enter Corporate Action Details window.
-
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.
-
Now we need to add the shares of the new GOOG holding we received. Click on the “Buy Stock” button in the portfolio’s toolbar.
-
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.
Now, let’s hope to see GOOGL and GOOG touch $1000 per share again soon!
(Full disclosure: I own shares of GOOGL and GOOG.)
