Alphabet announced a 20-for-one stock split on Tuesday, fuelling a 7 per cent rise in its stock price in after-market trading as its latest financial results also topped expectations.
The split — which is only the second in the 18 years since Google went public, following a one-for-one split in 2014 — sent the internet company’s market value soaring back towards $2tn despite a broader rout that has hit tech stocks.
Alphabet finished the year with a 32 per cent jump in revenue, to $75.3bn, slower than the 41 per cent in the preceding three months but still about $3bn more than most analysts had expected. Earnings per share also comfortably beat forecasts, rising 38 per cent to $30.60, compared to expectations of $27.32.
Even after the 20-for-one split, Wall Street trading late on Tuesday implied Alphabet’s shares would still be worth more than $137 a share. Investors have reacted enthusiastically to stock splits by other big tech companies, even though simply dividing the shares makes no difference to their intrinsic value. Splits in 2020 by Apple and Tesla sparked big rallies.
A 36 per cent surge in search and other advertising revenue underpinned Alphabet’s outperformance in the final quarter of last year, lifting revenue from this core part of Google’s business to $43.3bn. By contrast, YouTube advertising revenue rose 25 per cent to $8.6bn, while the Google Cloud division grew 45 per cent to $5.5bn.
Alphabet said the stock split was subject to a vote to increase its authorised share count at its next annual meeting, and would take place after the close of business on July 15.