A Note on Google's Share Distribution

 | Mar 14, 2014 | 2:00 PM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

goog

This Alert was sent to Action Alerts PLUS subscribers at 10:06 a.m. To subscribe to Action Alerts PLUS, please go here.

This is a housekeeping note on Google (GOOG) that pertains to the new share distribution that is upcoming later this month. The company will distribute shares of Class C stock as a dividend to stockholders with a dividend record date of March 27 and dividend payment date of April 2. The new shares will begin trading on April 3. For each Google share owned, we will receive one share of Class A voting stock (symbol will be GOOGL) and one share of Class C shares, which is non-voting (symbol GOOG).

The purpose of the transaction is for the Google founders to maintain voting control. While some see this move as not shareholder-friendly, we don't see this changing anything from a fundamental standpoint, and the 50% split in the share price from the transaction could actually spur additional demand, given the lower price.

The stock has stalled recently on concerns that margins are capped for the near term as the company is considering expanding its fiber platform (for better speed and larger scale). We continue to be impressed by the aggressive nature at the company to find new ways for growth, and in fact we don't buy into the softer margin story, especially since the company just sold off the dragging Motorola Mobility smartphone business. We see incremental opportunities in mobile advertising, display advertising, YouTube monetization and mobile hardware opportunities.

Shares trade at an attractive multiple (21.4x 2014 earnings, 18.1x 2015) given its double-digit top- and bottom-line growth, and it remains our largest position in the fund. 

Columnist Conversations

Kass:
Monitise has announced the sale of additional stock to Telefonica, Santander and Master Card. Expands relation...
Lang:
Lights, Camera, ACTION! This move lately in GPRO has been stellar, up nearly 12% over the past couple of sess...
For just under two weeks MCD has been bumping up against a very solid wall of resistance. The $96.95 to ...
Texas Instruments is surging today. Shares are up over 2.7% and are moving further into new 52W high gro...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.