Alphabet (GOOG) stock debuts after 20-for-1 split at $112

UPDATE: Google-parent Alphabet's (GOOG) stock split is trading for the first time at its new split-adjusted price on Monday. Shares priced above $2,200 last week were trading above $114 in Monday's premarket but underperformed market indices upon opening in the regular session. All three major US indices have advanced close to 1%, but GOOG is off 0.36% at $112.37 at the time of writing. It may take a few sessions for retail to catch on.

 

Google parent Alphabet (GOOG, GOOGL) has been giving up ground ahead of its much-heralded 20-for-1 stock split set to take place this Friday. With the futures market selling off before Wednesday's Consumer Price Index (CPI) release, this does not seem like the best time for a stock split. That is the big story this week, though. GOOG and GOOGL will each give investors 20 shares for every one they own as of July 1.If you were hoping to be a part of the split, that ship has sailed.

Read more: Shopify Stock News and Forecast: Bulls fail to SHOP after 10-for-1 stock split

Alphabet stock split

The Alphabet stock split actually works in that shareholders are issued 19 shares as a special dividend for each share they own, giving them 20 shares in total. The split will go into effect after the market closes on Friday, July 15, and GOOGL/GOOG will trade at the new split-adjusted price on Monday, July 18.

With shares currently trading at $2,330, as of now GOOGL shares should open next Monday somewhere around $116, give or take. This will be the first time that investors can buy Alphabet shares for such a reasonable price since 2005, the year after its IPO. This is also the second stock split in the search giant's history. The first was a 2-for-1 stock split in 2014.

Stock splits have become popular this year. Amazon (AMZN) just completed a 20-for-1 stock split as well. Since then, Amazon stock is down more than 11%. Shopify (SHOP), the Canadian complement to Amazon, also completed a 10-for-1 stock split recently. Since the split, SHOP stock has lost 8%. Both splits took place in the past month and a half, so this means little, but just know there is zero promise that a stock split for Alphabet leads to near-term upside.

Generally speaking, lower share prices allow retail traders to begin buying shares, which enlarges the investor base. With more individual investors owning shares, this is thought to solidify a base of support for the share price that can eventually lead to a heavier upside in a bull market. With markets tanking for the entire first half of 2022, none of the major stock splits announced this year seem to be providing upside yet.

When Alphabet first brought forth the idea of a stock split, GOOG was closer to $3,000. Alphabet stock is down 19.6% year to date, which is actually still much better than many of its megacap tech peers.

Alphabet stock news

Alphabet countersued Match Group (MTCH) on Tuesday, saying that the dating site conglomerate had succeeded in breaching its contract with Google and negotiating in bad faith. This is a corrollary to Match Group's suit from two months back when it charged that Google was abusing its monopoly power as owner of the Play Store. Match Group owns apps like Tinder, Hinge, Plenty of Fish and Match.com, all of which use the Google Play Store to gain customers. Google's suit says it wishes to remove Match Group's dating apps from its digital store entirely.

A client note of Credit Suisse is making the rounds for its general negativity toward big tech. Analyst Jonathan Golub says to expect robust 5.5% YoY EPS growth for the S&P 500 in Q2 but not for large cap tech.

"The largest 6 TECH+ companies (Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA), Meta (META)) are all projected to experience margin contraction," Golub said. In fact, his shop estimates that the FAANG stocks will offer up EPS that is 19.2% behind the year ago figures, although much of that will likely fall on Meta Platforms and Netflix.

Alphabet stock forecast

Alphabet stock has been trading inside an ascending, parallel price channel over the past two months. The top line connects May 13 with July 8, and the bottom line goes from May 24 to July 5. For our purposes, this means that if the recent swing high on July 8 is finished, then the price of GOOG will likely flee to support near $2,140. This corresponds to a split-adjusted price of $107, which is important since this move down could take more than a week.

If you want to buy the split, $107 is the price to shoot for. This period of drift and consolidation will end when GOOG breaks above $2,400 ($120 split-adjusted). The Relative Strength Index (RSI) is in a generally upward movement, so it appears that some accumulation may be taking place at present. Alphabet's next earnings date, July 26, is sure to cancel the current sideways action, so optimistic observers will want to jump in before then.

Alphabet daily stock chart

Previous updates

Update: GOOG shares are off 1.7% to $2,205 an hour into the search company's penultimate session on July 14 before the impending 20-for-1 stock split is realized. The sell-off on Thursday is unsurprising as the Nasdaq is off a similar 1.8%, and both the Dow and S&P 500 indices are down 2% concurrently. Call it the Jamie Dimon effect. JPMorgan (JPM), where CEO Dimon collects his paycheck, reported Q2 earnings this morning that fell 28% YoY. It was Dimon's consistent negativity over the world economy that has the market pessimistic. Also, the market is now dealing with the possibility of a 100-basis-point rate hike at the next FOMC meeting to deal with persistently high inflation showcased in Wednesday's CPI stunner.

Update: Alphabet Inc's shares tumbled to fresh weekly lows of $2,225 on Wednesday, shedding 2.34% on the day to settle at $2,227. The ongoing downtrend was accentuated by the news that Alphabet Inc.’s Google plans to slow hiring for the remainder of the year in the face of a potential economic recession, as per the email by Chief Executive Officer Sundar Pichai. Additionally, hotter than expected US Consumer Price Index (CPI) and an unexpected 100 bps rate hike announced by the Bank of Canada (BOC) almost confirmed a 75 bps September Fed lift-off. This triggered a fresh round of risk-aversion across the US markets, adding to the pain in the Alphabet Inc’s shares. Investors also remain nervous ahead of the company’s 20-for-1 stock split, scheduled on July 18.

Update: Alphabet Inc's shares ended Wednesday 2.34% lower at $2,227.07, as poor US inflation data weighed on Wall Street. US indexes plunged ahead of the opening but bounced back, ending the day in the red although off their intraday lows. The Dow Jones Industrial Average shed 208 points, while the S&P 500 lost 0.28%. The Nasdaq Composite was resilient, losing just 0.15%. The US Federal Reserve is between a rock and a hard place. Inflation remains out of control despite massive rate hikes, and further tightening lifts the country's risk of recession. Market players have brought back to the table a 100 bps hike, particularly after the Bank of Canada actually pulled the trigger for one full point. 

Update: GOOG shares have lost another 1.3% on Wednesday and are trading at $2,268. This is the third-to-last time Google will trade at this price in the near future as the stock's 20-for-1 split takes place after the close on Friday. The Nasdaq was down as much as 2.2% on Wednesday morning due to the Consumer Price Index's headline inflation figure for June coming in at a surprising 9.1%. This was way ahead of the 8.8% consensus, and now it seems the Federal Reserve will have no option but to keep pumping up interest rates to combat a rising price environment. Expect that $2,140 level to be reached by Friday.

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