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GOOGL or GOOG: Which Google Stock to Buy?

GOOGL or GOOG

GOOG and GOOGL are symbols for Alphabet, once known as Google. If you’re thinking about buying Alphabet Inc. shares, you’ve probably noticed there are two options. Both GOOG and GOOGL represent Alphabet’s common stock, but they have some differences. It can be hard for investors to choose between GOOGL and GOOG. The big difference is that GOOGL shares come with voting rights, while GOOG shares don’t. As of January 2024, there are 12.57 billion GOOGL shares and 12.46 billion GOOG shares available. In this post, we’ll look at both types of stocks to help you decide which one to buy.

Differences Between GOOG and GOOGL

When Google first became a public company in 2004, it made two types of common stock. They sold Class A stock to the public, and the founders and some executives kept Class B stock. Each share of Class B stock had 10 times more voting rights than Class A stock. This setup let insiders keep control of voting rights even if they didn’t own most of the company.

In 2014, Google did a different kind of stock split. They split each public Class A stock into two, making a new Class C stock with no voting rights. The founders did this because they worried that issuing stock for things like buying other companies and paying executives could make them lose control of voting rights.

After the split, Class A shares with voting rights traded as GOOGL. The new Class C shares with no voting rights took over as GOOG.

In 2015, Google changed its name to Alphabet and reorganized its business. This didn’t change the three types of shares the company had. Later, in 2022, Alphabet did a 20-for-1 stock split, but this also didn’t change the types of shares or how the company is owned.

For regular investors, having shares of either GOOG or GOOGL doesn’t make a big difference. Both types of shares mean you own part of Alphabet. GOOGL shares let you vote on company decisions, but GOOG shares don’t. Even if all the regular shareholders agreed on something, the people inside the company who own most of the shares can still decide differently.

Right now, the market doesn’t think having voting rights in Alphabet is very important. GOOG shares, without voting rights, usually sell for about the same price as GOOGL shares, which do have voting rights.

GOOG vs. GOOGL: Which Is a Better Investment?

If you’re a regular person thinking about which Alphabet shares to buy, the answer is pretty straightforward: GOOGL is the better option. That’s because GOOGL shares give you voting rights, which can make them more valuable. With this type of stock, you get to have a say in Google’s decisions, like picking board members and deciding on big choices.

Because of these extra voting rights, GOOGL shares usually cost a bit more than GOOG shares. But for most regular investors, buying enough shares to really influence Google’s decisions isn’t realistic. So, GOOG might be a bit cheaper. But in reality, the difference in price between the two types of shares is usually small because of arbitrage.

What do you need to know about Google voting shares?

Google voting shares are like tickets that let you have a say in important decisions for Alphabet Inc., the company that owns Google. These shares are called Class A shares and are publicly traded with the symbol GOOGL. Each Class A share gives you one vote.

If you own Class A shares, you can vote on things like choosing directors, deciding how much the top executives get paid, or if the company should merge with another. This voting power makes Class A shares more valuable compared to Class C shares, which don’t give you any voting rights.

But, there’s a catch. Class B shares, which regular folks like us can’t buy, have ten times more voting power than Class A shares. So, even if you own some GOOGL shares, if it’s not a lot, your influence on the company’s decisions might not be much.

Why Companies Use Multiple Share Classes

Companies use different types of shares to prevent losing control of the company when they go public. When a company goes public, its founders and insiders risk losing control because public shareholders become owners too. Founders and executives want to keep control even after the company becomes public.

Every time a public company raises money through an IPO or selling new shares, insiders can lose more control because their ownership gets smaller, called dilution. In a private company, founders and executives can make any decisions they want. But in a public company, shareholders vote on big decisions. Each common stock share usually gets one vote when shareholders decide on things like choosing board members, changing policies, selling new shares, or doing mergers.

When a company starts, the people who started it and the board members usually suggest to the shareholders how they should vote on different matters. But, the shareholders don’t have to do what they suggest. At the end of the day, the only definite way for people inside the company to control it is to have a little bit more than half of the voting rights.

If each share of a company’s regular stock means one vote, the people inside the company need to have more than half of all the company’s shares. Some companies, like Alphabet, have different kinds of stock with different voting powers. They do this so the insiders can keep control of the shares with more voting power while they sell shares with less voting power to other people.

Our Thoughts

The price of GOOG and GOOGL Google shares is a bit different, but not by much. Over time, both types of shares are likely to do equally well in terms of price. If Alphabet pays dividends, both types will pay out the same amount. So, if you’re only concerned about the price going up or getting dividends later, it doesn’t matter which one you get. However, if you care about voting at stockholders’ meetings, we recommend buying GOOGL (class A) shares because they have voting rights.