Jim Cramer says If Google can split its stock, other companies can, too. And after today, they probably will now that someone has taken the lead.
When it comes to megacap technology companies, Alphabet (GOOGL) – Get Alphabet Inc. Class A Report truly stands apart, Jim Cramer told his Mad Money viewers Wednesday, after the company reported blowout earnings that sent shares soaring up 7.5% by the close.
Alphabet’s conference call was jam-packed with new technologies that most people don’t even understand, Cramer explained, but it seems that every single one of them is making the company a ton of money. Not only did the parent of Google deliver on earnings, they also purchased $50 billion worth of their own stock, representing 5% of the total share count.
But more important than earnings, or buybacks, was Alphabet’s announcement that they will be splitting their stock 20:1 to make it more accessible to individual investors. While stock splits in and of themselves create no value whatsoever, Cramer applauded the move. Splits are a sign to investors that things are going well, and they appeal to investors who don’t want to buy fractional shares or risky options.
Over on Action Alerts PLUS, co-portfolio managers Bob Lang and Chris Versace say Alphabet’s December results point to a strong start to 2022 for the company, and in response they’re boosting their price target. Find out what they think of the stock split, too, and get in on the conversation at Action Alerts PLUS.
Splits also eliminate institutional bias. The main reason to keep your share price high is because big money managers pay commissions on a per share shares. Bigger shares make them more affordable to them, but less affordable for you.
These reasons may not sound like much, but the stock market runs on emotions, Cramer said, and that’s why splits matter. If Google can split their stock, everyone can. And after today, they probably will now that someone has taken the lead.
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