Google soars in stock while announcing a stock split
Google announced on Thursday its plans to create a third class of stock that will will make share trading easier. The announcement came after the company reported its first-quarter profit of $2.89 billion on a revenue of $10.65 billion.
Google’s stock closed on Thursday at $651.01, up 2.4% on the day and up 38% in the past five years, The Wall Street Journal reported.
The Internet powerhouse says the move will double the number of outstanding shares while halving the price, which could potentially make incentives for stock trading more attractive.
“Google had another great quarter,” company co-founder and chief executive Larry Page said in a AFP report. “We also saw tremendous momentum from the big bets we’ve made in products like Android, Chrome and YouTube.”
According to AFP, the creation of a non-voting stock will give the founders, Larry Page and Sergey Brin, control over their voting power while giving its investors a long desired two-to-one stock split. Investors will therefore obtain one share of the nonvoting stock for each share they currently hold.
“We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands. While the decision was controversial at the time, we believe in hindsight that it was absolutely the right thing to do,” Page said.
Acknowledging that some investors will be upset by the change, Page responded by saying its move is acceptable as long at the company remains profitable. Furthermore, the move to a stock split was partly motivated by Google being watered down through employee stock compensation, the AFP reports.
The company continues to look forward with momentum building towards its Android-powered mobile gadgets, YouTube, and Google+ social networking site.