Alphabet Inc. is brining big stock splits back to the market with the rationale that prospective buyers won’t need upwards of $3,000 to own a share.
The company said late Tuesday it will increase its outstanding shares by a 20-to-1 ratio.
“The reason for the split is it makes our shares more accessible,” Ruth Porat, Alphabet’s chief financial officer, said in a conference call with television anchors. “We thought it made sense to do.”
This would lead to lower stock price making it easier for mom-and-pop traders easier to buy shares rather than buying fractional stocks through brokerage firms.
The company plan for 20-for-1 split would reduce the price of Class A shares to roughly $138, based on Tuesday’s closing price of $2,752.88.
“Institutional investors can buy in size and the price per share doesn’t matter,” said Ed Clissold, chief U.S. strategist at Ned Davis Research. “But for a smaller investor, a lower price-per-share makes it easier for them to buy a reasonable number of shares.”
