GOOG vs. GOOGL – Which One Should You Buy?

GOOG vs. GOOGL – Which One Should You Buy?

Alphabet (aka Google) has two classes of shares:

  • GOOGL (Class A) and
  • GOOG (Class C)

Difference between GOOG and GOOGL

GOOG shares have no voting rights while GOOGL shares do.

And the GOOG vs GOOGL debate usually comes down to whether you want to have a say in Google’s corporate decision-making commensurate with your ownership share.

GOOGL shareholders have voting rights and can elect the board of directors, while GOOG shareholders cannot.

GOOG shares are often cheaper than GOOGL shares, so some investors prefer them for this reason, but this is not always the case.

If you are price-sensitive, you can go with whatever is cheaper. If you care about voting rights, that can enter into your decision of which class to buy.

If Alphabet’s options markets are of interest to you, you may want to buy the shares of the more liquid options market, which can be found by looking at the spreads between various options of interest.

 

Why did Google creates two different share classes?

This is a common maneuver made by founders and insiders to retain majority voting share of a company.

Going public means giving up control to an outside investor base that may not be as informed as those inside the company making the decisions.

To avoid having their decision-making capacities diluted to a large degree, many companies issue separate classes of shares to retain this power.

With GOOG and GOOGL, Google’s founders, Larry Page and Sergey Brin, were able to keep control over the company while still raising capital from public investors.

Class A shares (GOOGL) have one vote per share while Class C shares (GOOG) have none. Class B shares are not traded publicly but carry strong voting power.

This means that Page and Brin, who own a large amount of GOOGL shares and almost all the Class B shares, still control somewhere around 60 percent of the voting power despite owning only 14 percent of Alphabet’s total equity.

 

What are Alphabet’s Class B shares?

Alphabet has a third class of shares, Class B, which are not publicly traded.

These shares have 10 votes each and are only owned by Page, Brin, and a few early Alphabet investors.

The vast majority of GOOGL and GOOG shareholders are not insiders like Page and Brin, so they have no say in how the company is run.

This dual-class share structure is not unusual for tech companies. Meta (META), formerly known as Facebook (FB), for example, also has Class A and Class B shares.

 

Should you buy GOOGL or GOOG?

There is no easy answer to this question, as it depends on a number of factors. Both GOOGL and GOOG offer strong growth potential, but there are also some risks to consider.

Some key things to keep in mind when making your decision include:

The difference between the two stocks

GOOGL is the Class A stock of Alphabet Inc., while GOOG is the Class C stock.

This means that GOOGL has one vote per share, while GOOG has none.

Alphabet Inc.’s business model

The company’s core business is search, but it also has significant revenue streams from advertising and its other “moonshot” projects with its venture capital ambitions.

The company’s growth potential

Alphabet Inc. is a large and diversified company with strong growth potential.

However, it faces some risks, such as increased regulation of its core business.

Your investment goals

Are you looking for short-term gains or long-term growth?

Your answer to this question will likely influence your decision of which stock to buy.

At the end of the day, there is no right or wrong answer when it comes to whether you should buy GOOGL or GOOG.

The decision depends on your individual circumstances and investment goals.

 

Google’s Shares Class Structures

  • Class A: Regular voting rights (GOOGL)
  • Class B: Held by the founders with 10 times the voting power compared with Class A
  • Class C: No voting rights, commonly held by employees and some Class A stockholders (GOOG)

Alphabet Class A vs Class C – FAQs

Why is GOOGL usually worth more than GOOG (or vice versa)?

GOOGL has voting rights while GOOG does not. GOOGL shareholders can elect the board of directors, while GOOG shareholders cannot.

However, there are other factors as well. Alphabet repurchases its class C stock (GOOG) and not its class A (GOOGL).

So, all else equal, there would be more demand for GOOG than GOOGL.

In the end, they both convey the same amount of ownership over Alphabet, so the price discrepancies should be minor.

What is the difference between GOOG and GOOGL shares?

The main difference between GOOG and GOOGL is that GOOGL has voting rights while GOOG does not.

GOOGL shareholders can elect the board of directors, while GOOG shareholders cannot.

GOOGL also has a higher price than GOOG.

Why did Google create two different share classes?

This is a common maneuver made by founders and insiders to preserve decision-making power in a company.

Many companies issue separate classes of shares to sell shares to the public while still keeping the majority of their decision-making power.

Why does Alphabet have Class B shares?

The Class B shares have 10 votes each and are only owned by Page, Brin, and a few early Alphabet investors.

The Class B shares are not publicly traded.

Should you buy GOOGL or GOOG?

It depends on your investment goals. If you want to own a piece of a company with strong voting rights, then GOOGL is the stock for you.

If you don’t care about voting rights, then GOOG might be a better choice.

Of course, you could always buy both stocks and have a little bit of both.

Why is Google’s stock called Alphabet instead of Google?

In 2015, Google restructured itself and became Alphabet Inc. GOOGL and GOOG are still the tickers for the Class A and Class C shares of Alphabet Inc., respectively.

What is GOOGL’s stock split history?

GOOGL has had 2 stock splits in its history.

The first was a 1998-for-1000 split in 2014, meaning for every 1000 shares of GOOGL owned pre-split, the shareholder now owned 1998 shares.

In July 2022, there was a 20-for-1 stock split, which means Alphabet investors received an additional 19 shares for each one they already own.

 

Conclusion – GOOG vs. GOOGL

Alphabet (Google) has two classes of shares:

  • GOOGL (Class A) and
  • GOOG (Class C)

Alphabet created two different classes of shares to retain voting power.

GOOGL is a class of Alphabet stock with voting rights while GOOG does not have voting rights. GOOGL has historically traded at a higher price than GOOG, but that hasn’t always been true.

The decision of whether to buy GOOGL or GOOG depends on your investment goals.

If you want voting rights, then GOOGL is the stock for you. If you don’t care about voting rights, then GOOG might be a better choice.

 

 

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