Stock split summer is just heating up. With the Amazon (NASDAQ:AMZN) stock split safely in the rearview, investors now turn to the next tech titan that is planning to split its stock yet again. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), the parent company of Google, is scheduled to enact a 20-for-1 split on July 15. That date is almost a month away but investors should already be paying close attention to the GOOGL stock split.
What’s Happening With GOOGL Stock
This hasn’t been a good day for tech stocks. Fears of both inflation and further rate hikes are pushing down many high growth names, among them GOOGL stock. As of this writing, it is down 3% while GOOG is down 3.2%. Both stocks are on a steady downward trajectory with rebound in sight.
These patterns are in keeping with the difficult month GOOGL stock has had. But with the Google split looming, many investors may see this as an opportunity to buy the dip before the split makes their holdings significantly larger.
Stock Split Summer
One of the most popular questions among investors this season has been “why are so many companies splitting their stock?” The short answer is because stock splits work. While they aren’t a magic pill to automatically boost shares, they do make them more accessible to retail investors and generate plenty of momentum.
The Amazon stock split recently made headlines. While AMZN stock has been struggling since, investors aren’t too concerned. Elisabeth Buchwald of USA Today recently out how the split actually helped them come out ahead despite Amazon’s share per share price dropping so significantly.
Amazon shareholders didn’t lose a penny Monday. In fact, if they bought shares of Amazon on Friday and sold them Monday, they would have come out ahead — short-term capital gains tax aside — since the stock closed higher.
Is that in the cards for Alphabet?
As of now, there’s no reason to suspect that it isn’t. InvestorPlace contributor Joel Baglole recently advised investors to take advantage of GOOG’s 52-week low prices before the stock split. While GOOGL stock has risen slightly since then, it is still trading at low enough levels to make for a tempting bargain. And with the Google stock split rapidly approaching, shareholders are about to see a generous 20-for-1 payout, just like Amazon investors did. Both companies are staples of the tech sector and inevitably will bounce back when recession fears subside.
What It Means
The underlying message of the stock split trend is this: companies understand that it is in their best interest to make shares more accessible to retail investors. Alphabet has split its stock before and has risen higher as a result. Now that the 2021 bull market that carried tech stocks to new heights has shifted. So, it makes sense for companies to open themselves up to a new, highly motivated class of investors.
Stock split summer is off to a good start with Amazon’s successful split. Now, as anticipation mounts, Google is poised to be the next company to split its stock and generate the type of momentum it needs to start rising again. All investors should be watching GOOGL stock on July 15.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
