How to play Google parent Alphabet’s 20-for-1 stock split

  • Alphabet is preparing to split on July 15.
  • GOOG, GOOGL will trade at split-adjusted price on July 18.
  • Shareholders will receive 20 total shares for each one held on July 1.

Google parent Alphabet (GOOG, GOOGL) has been giving up ground ahead of its much-heralded 20-for-1 stock split set to take place this Friday. With the futures market selling off before Wednesday’s Consumer Price Index (CPI) release, this does not seem like the best time for a stock split. That is the big story this week though. GOOG and GOOGL will each give investors 20 shares for every one they own as of July 1.If you were hoping to be a part of the split, that ship has sailed.

Read more: Shopify Stock News and Forecast: Bulls fail to SHOP after 10-for-1 stock split

Alphabet stock split

The Alphabet stock split actually works in that shareholders are issued 19 shares as a special dividend for each share they own, giving them 20 shares in total. The split will go into effect after the market closes on Friday, July 15, and GOOGL/GOOG will trade at the new split-adjusted price on Monday, July 18.

With shares currently trading at $2,330, as of now GOOGL shares should open next Monday somewhere around $116, give or take. This will be the first time that investors can buy Alphabet shares for such a reasonable price since 2005, the year after its IPO. This is also the second stock split in the search giant’s history. The first was a 2-for-1 stock split in 2014.

Stock splits have become popular this year. Amazon (AMZN) just completed a 20-for-1 stock split as well. Since then, Amazon stock is down more than 11%. Shopify (SHOP), the Canadian complement to Amazon, also completed a 10-for-1 stock split recently. Since the split, SHOP stock has lost 8%. Both splits took place in the past month and a half, so this means little, but just know there is zero promise that a stock split for Alphabet leads to near-term upside.

Generally speaking, lower share prices allow retail traders to begin buying shares, which enlarges the investor base. With more individual investors owning shares, this is thought to solidify a base of support for the share price that can eventually lead to a heavier upside in a bull market. With markets tanking for the entire first half of 2022, none of the major stock splits announced this year seem to be providing upside yet.

When Alphabet first brought forth the idea of ​​a stock split, GOOG was closer to $3,000. Alphabet stock is down 19.6% year to date, which is actually still much better than many of its megacap tech peers.

Alphabet stock news

Alphabet countersued Match Group (MTCH) on Tuesday, saying that the dating site conglomerate had succeeded in breaching its contract with Google and negotiating in bad faith. This is a corrollary to Match Group’s suit from two months back when it charged that Google was abusing its monopoly power as owner of the Play Store. Match Group owns apps like Tinder, Hinge, Plenty of Fish and, all of which use the Google Play Store to gain customers. Google’s suit says it wishes to remove Match Group’s dating apps from its digital store entirely.

A client note of Credit Suisse is making the rounds for its general negativity toward big tech. Analyst Jonathan Golub says to expect robust 5.5% YoY EPS growth for the S&P 500 in Q2 but not for large cap tech.

“The largest 6 TECH+ companies (Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA), Meta (META)) are all projected to experience margin contraction,” Golub said. In fact, his shop estimates that the FAANG stocks will offer up EPS that is 19.2% behind the year ago figures, although much of that will likely fall on Meta Platforms and Netflix.

Alphabet stock forecast

Alphabet stock has been trading inside an ascending, parallel price channel over the past two months. The top line connects May 13 with July 8, and the bottom line goes from May 24 to July 5. For our purposes, this means that if the recent swing high on July 8 is finished, then the price of GOOG will likely flee to support near $2,140. This corresponds to a split-adjusted price of $107, which is important since this move down could take more than a week.

If you want to buy the split, $107 is the price to shoot for. This period of drift and consolidation will end when GOOG breaks above $2,400 ($120 split-adjusted). The Relative Strength Index (RSI) is in a general movement, so it appears that some accumulation may be taking place at upward the present. Alphabet’s next earnings date, July 26, is sure to cancel the current sideways action, so optimist observers will want to jump in before then.

Alphabet daily stock chart

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