Google Incorporated has defined itself as one of the world’s leading technology companies. As of July 27, 2015, the total market value of Google’s Class A and Class C stocks was $440.47 billion. Google is the world’s second-largest company by market capitalization, second only to Apple. Google’s market value is more than 10 times that of some of its competitors, such as Yahoo, which has a market value of US$35.16 billion. Google’s market value is also 1.67 times that of social media giant Facebook Incorporated (FB), which has a market value of $264.45 billion.
If you invest $1,020 at an initial public offering (IPO) price of $85, you will be able to buy 12 shares. After the stock split, you will own 12 Google Incorporated Class C shares (GOOG) and 12 Google Incorporated Class A shares (GOOGL).
If you invested in Google after the IPO
On April 29, 2004, Google, the world’s number one Internet search engine, submitted its long-awaited IPO application to the US Securities and Exchange Commission (SEC). Prior to the initial public offering, Google had generated $961.9 million in revenue in 2003. The company seeks to raise US$2.7 billion through an initial public offering.
Google held an initial public offering on August 19, 2004. The company went public for $85, sold 22.5 million shares, and raised more than $1.9 billion. Google shares rose 18.05% to $100.34 at the close of the IPO day. If you can buy Google stock for $85, you will get 12 shares before the company splits the stock, which is $1,020 divided by $85.
2014 stock split
Since you own 12 shares of Google Incorporated before the record and ex-dividend date, you will be able to participate in its stock split. The company distributed a 100% stock split, similar to a two-to-one stock split.
Google announced that the company will create a new non-voting equity or Class C stock. Google distributes its Class C shares to shareholders in the form of dividends. The dividend record date is March 27, 2014, and the dividend payment date is April 2, 2014. The new Class C shares began trading on April 3, 2014, the ex-dividend date.
After this stock split, you will receive one share of Google Incorporated Class C stock for each share of Google Incorporated Class A stock. You will own 12 shares of each stock. After the stock split, you will also have 12 votes, because each share of Google’s Class A shares has one vote.
The present value of Google’s IPO investment
As of July 27, 2015, Google Incorporated Class A shares closed at $658.27 per share, and its Class C shares closed at $627.26 per share. Currently, the initial investment value of US$1,020 is US$15,426.36, which is 12 shares multiplied by US$658.27 per share plus 12 shares multiplied by US$627.26. The return on investment (ROI) of these stocks purchased during Google’s IPO will be 1,415.39%.
Compare Facebook’s return on investment
If you invest $988 immediately after Facebook’s IPO, the return on investment generated by the Google IPO is almost 10 times the return on investment generated by Facebook. Assuming you can buy Facebook stock at an IPO price of $38, you will own 26 shares. As of July 27, 2015, Facebook closed at $94.17 per share, and your investment is worth $2,448.42. Your return on investment will be 147.82%.