As an investor, have you ever looked up Google‘s stock and wondered why the famous tech giant has not one but two symbols trading – GOOGL and GOOG? If so, you‘ve spotted an unusual structure called a dual-class share system.
I‘m going to walk you through exactly what‘s going on with Google‘s stock. By the end, you‘ll understand:
- Why Google and some other major tech players use this approach
- The key differences between the Class A and C shares
- Who holds these different classes of stocks
- Pros, cons and implications of this split system
- How it may influence your own investing decisions
Let‘s dive in!
Overview: Google‘s Dual Class Stock Structure
In 2004, before going public, Google implemented a dual-class common stock structure:
Class A (GOOGL)
- Publicly traded
- Individual investors purchase
- 1 vote per share
Class B
- Only held internally by executives
- 10 votes per share
- Not publicly traded
This allowed co-founders Larry Page and Sergey Brin to:
- Retain majority voting control of the company
- Regularly sell portions of their shares without worrying about losing oversight
In 2014, Google enacted a stock split to carve out an entirely new third share class:
Class C (GOOG)
- Issued to all current Class A shareholders
- Publicly traded under a new ticker
- Crucially – these shares have 0 votes
Still with me? Let‘s explore why Google made these unconventional moves and what it all means.
Why Did Google Adopt a Multi-Class Structure?
Brin and Page used this creative setup to balance their desire to access public markets with retaining long-term leadership over their vision for Google.
Multi-class structures grew in popularity among similar late 90s/early 2000s tech IPOs for benefits like:
- Added stability from unified leadership with locked-in voting control
- Protection against forced management changes
- Flexibility to raise funds without worrying about dilution
In fact, Google demonstrated the strengths so clearly that other tech unicorns like Facebook and Snap copied it later.
Google By the Numbers: Ownership and Control Breakdown
Let‘s quantify Google‘s complex ownership structure with some key stats:
- Sergey Brin – Owns 41.3% of Class B share votes
- Larry Page – Also holds 41.3% of Class B votes
- Eric Schmidt – Controls 16.9% of Class B votes
Which means:
- Total Class B Votes Controlled by Founders – 99.5%
Despite this being a private share not for public trading, it ensures the founders can outvote all regular Class A shareholders combined on any issue.
Now, let‘s contrast to value owned of common shares out in the market:
| % Total Value Owned | Class A (GOOGL) | Class C (GOOG) |
|---|---|---|
| Sergey Brin | 15.0% | 0% |
| Larry Page | 15.4% | 0% |
| Eric Schmidt | 4.1% | 0% |
| Public Investors | 65.5% | 100% |
So public shareholders combined do technically own a vast majority of Google‘s overall stock value through their Class A and C holdings.
But Page and Brin‘s special 10-votes-per-share Class B give them ironclad control over voting regardless of how much gets issued to the public.
Differing Rights: Comparing GOOGL and GOOG Shares
Now that you know why Google chose this structure, let‘s contrast key differences between the Class A and C shares:
Class A (GOOGL)
- Votes – 1 per share
- First public shares issued in 2004 IPO
- Traditionally more held by institutions
- Often priced slightly higher
Class C (GOOG)
- Non-voting
- First issued in 2014 stock split
- Makes up most volume traded daily
- Accessible price for more individual investors
So in deciding between them, GOOGL offers voting rights for shareholders interested in influence over policies. GOOG allows purely financial exposure without any say.
Should You Buy GOOGL, GOOG or Both?
- For income investors focused on dividends, GOOGL provides more rights protections should payout policy ever shift.
- For traders making short-term bets on upside, GOOG provides similar exposure without voting considerations.
- Long-term buy-and-hold investors may be best served owning both classes. Having a split often provides useful volatility diversification.
Owning either gives you part-ownership stake in one of the world‘s most profitable companies. The choice comes down to voting influence vs. maximum liquidity preference.
Final Thoughts on Google‘s Shared Structure
While controversial to some, Page and Brin‘s shrewd multi-class structure has empowered them to guide Google to global dominance. Other tech giants like Facebook have emulated the share split model since.
For investors, the choice between GOOGL and GOOG offers preferred access either to voting rights or higher liquidity without voting interests getting in the way.
No matter your investing strategy and preferences, understanding the special share classes and their differences allows you to make the most informed decisions about owning Google.
I hope this breakdown has helped explain why Google‘s stock has both GOOGL and GOOG symbols. Please let me know if you have any other questions!
