Alphabet’s GOOG Vs GOOGL: How Are These Stocks Different?

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GOOG and GOOGL: two stocks, one company. Which one is which and does it matter? Depending on your interests, it might. Read on to find out the difference.

You’re an individual investor interested in tech stocks in general and Alphabet—parent of Google and other companies—in particular. Head to a stock information site or online broker, look up Alphabet and you’ll find two different stocks with the tickers GOOG and GOOGL.

“[They] were initially used mainly to allow founders and early investors to maintain control” Drozdz continued. One class of stock might offer more votes per share than another. This has created controversy since 1925, when automaker Dodge Brothers went public on the New York Stock Exchange. The founders kept total voting control although they had provided only 1.

There is also the concern about self-dealing. “Another use of multi-class shares is the ability to give preference to a particular class, for example through the right to a greater share of dividends per share or priority to purchase stocks from new issues, which is known as 'subscription preference rights,’” Drozdz says. Again, it comes down to fairness. Those with the most invested funds can find themselves getting the smallest returns.

Class B shares have ten votes per share. Founders and insiders have them and the shares cannot be publicly traded. And so, there are only two ticker symbols.Voting shares mean that shareholders can have a voice in major decisions at annual meetings. They can choose directors, vote for big changes in how the company operates and indicate their preferences, even if non-binding, on topics like compensation schemes for executives.

The new corporate and stock structure provided the answer. The small group controlling the company continued to do so as the B class shares comprised 59.6% of all votes, according to Drozdz.

 

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