Alphabet's GOOG vs. GOOGL: An Overview
GOOG and GOOGL are stock ticker symbols for Alphabet (the company formerly known as Google). The main difference between the GOOG and GOOGL stock ticker symbols is that GOOG shares have no voting rights, while GOOGL shares do.
The company created two classes of shares in April 2014. The reason for the split between the two classes of shares was to preserve the control of founders Larry Page and Sergey Brin. When companies go public, often founders lose control of their company when too many shares are issued.
Alphabet has a dogged belief in its mission to organize the world's information and a strong commitment to its founders' vision. Company visions can be compromised when companies go public, as this vision often is forced to take a back seat to shareholders' interests. Markets and investors can be myopic in their search for immediate results even at the expense of long-term results. The stock split is one method that enables Brin and Page to take advantage of public-market liquidity while still retaining voting rights and not losing control of the company.
- Alphabet, Google's parent company, has two listed share classes that utilize slightly different ticker symbols.
- GOOGL shares are its class-A shares, also known as common stock, which have the typical one-share-one-vote structure.
- GOOG shares are class-C shares, meaning that these shareholders have no voting rights.
- There is a third type of share, class-B, which are held by founders and insiders that grant 10 shares per vote. Class-B shares cannot be publicly traded.
GOOGL shares are categorized as Class-A shares. Class-A shares are known as common shares. They give investors an ownership stake and, typically, voting rights. They are the most common type of shares.
GOOG shares are what is know as the company's Class-C shares. Class-C shares give stockholders an ownership stake in the company, just like class-A shares do, but unlike common shares they do not confer voting rights to shareholders. As a result, these shares tend to trade at a discount to Class-A shares.
These Class-C shares should not be confused for the type of C-shares issued by some mutual funds.
There also are class-B shares that have 10x votes per share, but these are held by founders and insiders and do not trade publicly.
A Summary of the Class Structures:
- Class A—Held by a regular investor with regular voting rights (GOOGL)
- Class B—Held by the founders and has 10 times the voting power compared to Class A
- Class C—No voting rights, normally held by employees and some Class A stockholders (GOOG)
What’s the Difference Between GOOG and GOOGL?
Often, activist investors group together and accumulate shares to press companies into enacting shareholder-friendly initiatives that boost stock prices, such as cost cutting, share buybacks, and special dividends. This process can become hostile, with activists engaging in public battles to win board seats and wrest control of the company from its owners. These short-term-driven decisions are antithetical to Alphabet's mission. Page and Brin wanted to preempt this possibility, especially as Alphabet's stock price ascent slowed and growth in its core business declined.
When Alphabet was growing by leaps and bounds, it could do no wrong. As its internet search business exploded, the company had a monopoly with more than 90 percent of the market. Many investors thought of Alphabet as an internet ETF and considered it an integral part of stock market exposure. However, as the internet has migrated to mobile devices, Alphabet has been less successful in transitioning. Additionally, Alphabet was unsuccessful in taking advantage of the social media wave, losing out to Facebook and Twitter. The company also came under fire from critics and stockholders for its lavish employee perks, heavy spending, and lack of profitable areas beyond search.
In 2017, the S&P board announced that it would no longer list companies that offer no-vote shares on some of its indexes.