Alphabet’s GOOG vs. GOOGL: What’s the Difference?
What Is the Difference Between Alphabet’s GOOG and GOOGL?
GOOG and GOOGL are stock ticker symbols for Alphabet (the company formerly known as Google). The main difference between the GOOG and GOOGL stock ticker symbols is that GOOG shares have no voting rights, while GOOGL shares do.
The company created a new class of nonvoting stock in April 2014 and issued a Class C share for each Class A share previously held by shareholders. Anyone who held A shares at the time of the split received an equal number of C shares, but their voting power did not increase. The action preserved the majority control of founders Larry Page and Sergey Brin. When companies go public, founders often lose control over time as additional share offerings and sales leave them in the minority.
Alphabet’s founders are determined to remain in control of the company, a goal shared by other tech tycoons. Markets and investors can be shortsighted in their insistence on immediate results, even at the expense of long-term strategy. The stock split enabled Brin and Page to take advantage of public-market liquidity while retaining majority control of the company.
- Alphabet, Google’s parent company, has two listed share classes that use slightly different ticker symbols.
- GOOGL shares are its Class A shares, also known as common stock, which have the typical one-share, one-vote structure.
- GOOG shares are Class C shares that confer no voting rights.
- Because of 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 one another.
- There is a third type of share, Class B shares, which are held by founders and insiders and confer 10 votes per share. Class B shares can’t be publicly traded.
What’s the Difference Between GOOG and GOOGL?
Google’s parent company, Alphabet, announced a 20-for-1 stock split in February 2022. The split took effect on July 15, 2022.
GOOGL shares are categorized as Class A shares. Class A shares are known as common shares. They give investors an ownership stake and, typically, voting rights. They are the most common type of shares.
GOOG shares are the company’s Class C shares. Class C shares give stockholders an ownership stake in the company, just like Class A shares, but unlike common shares, they do not confer voting rights on shareholders. As a result, 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 funds.
There are also Class B shares conferring 10 votes per share, but these are held by founders and insiders only and do not trade publicly.
A Summary of the Class Structures
- Class A: Held by a regular investor with regular voting rights (GOOGL)
- Class B: Held by the founders, with 10 times the voting power of Class A shares
- Class C: No voting rights, typically held by employees and some Class A stockholders (GOOG)
GOOG vs. GOOGL: Which Is a Better Investment?
Because GOOG shares come with voting rights, they may be considered more valuable. Shareholders with this type of stock can have a say in Google’s corporate policy, vote for the board of directors, and approve or disapprove of any major decisions.
For this reason, GOOG shares tend to trade at a slightly higher price than GOOGL shares, due to the additional voting rights. However, most retail investors cannot buy enough shares to significantly affect the company’s policies, making GOOGL the slightly more cost-effective choice. In practice, the difference between the two share classes is usually small due to arbitrage.
How Voting Shares Are Used
Often, activist investors band together and accumulate shares to press companies into enacting shareholder-friendly initiatives that boost stock prices, such as cost-cutting, share buybacks, and special dividends. This process can become hostile, with activists engaging in public battles to win board seats and wrest control of the company from management. After issuing nonvoting shares to retain majority control, Brin and Page need not worry about this 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 indexes while grandfathering in those already included.
Why Is GOOG More Than GOOGL?
Because A shares have more voting rights, and because these rights have some value, they often trade at a slight premium. In reality, GOOG and GOOGL often trade for just around the same price. For example, on Aug. 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.
When Was the GOOG Stock Split?
On Jul. 15, 2022, Google conducted one of the largest stock splits in history. It was a 20-for-one split, meaning that any investor with a share of GOOG or GOOGL stock before the split had 20 shares of the stock after the split. This affected all share classes of Google stock, making the shares significantly more affordable to retail investors.
What Are Alphabet’s Class B Shares?
Alphabet also has a class of B shares that are only owned by insiders, and do not trade on stock exchanges. The B shares are thus owned by Sergey Brin, Larry Page, Eric Schmidt, and a few other directors. Unlike A shares that confer one vote per share, shareholders of B shares receive 10 votes.
The Bottom Line
There’s definitely a difference between the price of the two types of Google shares that you can buy, though it is relatively small. If you feel that voting at the stockholders’ meeting is important to you, then aim for the A shares.