Google is the most well-known search engine on the web. It was created by two Stanford University PhD students, Larry Page, and Sergey Brin, in 1998. Google has become an integral part of our lives, from providing us with useful information to helping us stay connected through its various products and services.
However, many people do not know the difference between Google (GOOG) and Alphabet Inc.'s stock ticker, GOOGL. While both are associated with Google, they are two distinct entities that serve different purposes.
The main difference between GOOGL and GOOG is that GOOGL is entitled to one vote per share, while GOOG stock has no voting rights. This means that shareholders of GOOGL have more control over the company's decisions than holders of GOOG stock. It also makes GOOGL a more attractive investment for those looking for active involvement in the direction and governance of Alphabet Inc. and its subsidiaries, such as Google.
Overview
| Criteria | GOOG (Class C) | GOOGL (Class A) |
| Voting Rights | No voting rights | One vote per share |
| Dividends | No dividend rights | Eligible for dividend rights |
| Ticket symbol | GOOG | GOOGL |
| Share price | Generally lower | Generally higher |
| Stock exchanges | Traded on NASDAQ | Traded on NASDAQ |
| Market capitalization | Lower than GOOGL | Higher than GOOG |
Google (GOOG) is a publicly traded company listed on the NASDAQ Stock Market. Its parent company is Alphabet Inc., which also owns and manages Google's various products, services, and entities.
- GOOG stock consists of shares in the company itself. When someone purchases a share of GOOG stock, they are investing directly in the company.
- Alphabet Inc.'s stock ticker is GOOGL (formerly known as Google Class A). GOOGL represents ownership of a class of shares in Alphabet Inc., the parent company of Google. The stock is traded on the NASDAQ Stock Market and is made up of two classes: Class A (GOOGL) and Class C (GOOG).
- GOOGL stock offers more potential for appreciation compared to GOOG stock due to its voting rights. As a result, GOOGL has historically traded at higher prices than GOOG. However, this does not necessarily mean that investing in GOOGL is a better choice than investing in GOOG; each has its own risks and rewards.
GOOG vs. GOOGL: Which is a Better Investment?
When we look at things from an investment perspective, both GOOGL and GOOG have performed quite well and have significant growth potential with the technological advancements that are yet to come.
That said, the share price of GOOGL is generally higher due to the increased voting power coupled with ownership rights. Furthermore, GOOGL also tends to have higher trading volumes than GOOG, making it a more liquid investment option.
As of 2021, Alphabet’s Q4 earnings report showed a promising 39% hike in revenue compared to the same period in the previous year due to advancement in areas like cloud computing, AI and self-driving cars.
Both of these trade at a price-to-earnings (P/E) ratio of around 30, compared to an S/P 500 P/E ratio of roughly 20 on average. This indicates that the market has factored in a premium for the expected high growth rate and technological prowess of Alphabet in the tech industry.
When considering a monetary investment, you should analyze both financial metrics and industry trends, which in this case, are rock solid for both the stocks.
Another thing to watch out for is Alphabet’s competition with other companies like Apple, Facebook and Amazon which could disrupt the stock price.
Key metrics also include revenue growth, earnings per share, operating margins, and return on equity. In conclusion, which stock is better depends upon your personal financial goals.
Google Share Classes
Alphabet, the parent company of Google, has three classes of shares, denoted as Class A, Class B, and Class C shares. Here's a detailed description of each class:
- Class A Shares: These shares have voting rights and are held by the general public, institutional investors, and insiders. Class A shares are entitled to one vote per share, which gives shareholders the right to participate in important corporate decisions, such as electing directors, approving mergers or acquisitions, and amending the company's bylaws.
- Class B Shares: These shares also have voting rights, but they are primarily held by insiders and founders, including Larry Page, Sergey Brin, and Eric Schmidt. Class B shares are entitled to 10 votes per share, which gives insiders and founders greater control over the company's strategic decisions and governance.
- Class C Shares: These shares have no voting rights and were created in 2014 as a way for Alphabet to raise capital without diluting the voting power of its insiders and founders. The general public and trade primarily hold Class C shares under the tickers GOOG and GOOGL. They are designed to track the performance of Class A shares and are also used for employee stock compensation plans.
It is worth noting that Class A and Class C shares have the same economic rights, including dividend payments and access to the company's assets in the event of liquidation. The main difference between the two is the voting power of Class A shares. Meanwhile, Class B shares are not publicly traded and are held primarily by insiders and founders.
Did you know? Brin Sergey owns the most GOOGL stock, 369.91M shares to be precise. His shares are currently valued at $38.06B.
Overall, Alphabet's three classes of shares offer different levels of voting power and are designed to meet the needs of different types of investors. Class A shares offer the most voting power for outside investors, while Class B shares give insiders and founders greater control over the company's strategic decisions. Class C shares, on the other hand, offer a way for the company to raise capital without diluting the voting power of its insiders and founders, and are primarily held by the general public.
It's worth noting that Alphabet's dual-class share structure, which gives insiders and founders greater voting power, has been a subject of criticism from some investors and corporate governance experts. Critics argue that it creates a lack of accountability and can lead to decisions that benefit insiders and founders at the expense of outside shareholders. However, proponents of the dual-class structure argue that it allows the company's founders to focus on long-term growth and innovation without being swayed by short-term market pressures.
Despite the controversy, Alphabet's three classes of shares have proven to be a popular investment for many investors. As of February 2023, the company has a market capitalization of over $1.8 trillion and is one of the largest and most profitable companies in the world.
Conclusion
In summary, GOOGL represents ownership of a class of shares in Alphabet Inc., the parent company of Google. At the same time, GOOG is a publicly traded company listed on the NASDAQ Stock Market with shares in the company itself.
While both have the potential for appreciation, GOOGL offers more control over the direction and governance of Alphabet Inc. due to its voting rights per share. Ultimately, investors should consider the potential risks and rewards before deciding which stock is right for them.
