Alphabet Reports Blowout Earnings, Says 20-1 Stock Split Will Make Shares ‘More Accessible’

Google parent company Alphabet reported blowout fourth-quarter 2021 earnings on Monday, Feb. 1, beating Wall Street expectations, and announced a 20-for-1 stock split, sending the stock soaring.

See: Alphabet Fourth-Quarter Earnings Beat Estimates
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The stock was up 7% the morning of Feb. 2.

 “Our fourth quarter revenues of $75 billion, up 32% year over year, reflected broad-based strength in advertiser spend and strong consumer online activity, as well as substantial ongoing revenue growth from Google Cloud,” Ruth Porat, chief financial officer of Alphabet and Google, said in the earnings release. “Our investments have helped us drive this growth by delivering the services that people, our partners and businesses need, and we continue to invest in long-term opportunities.”

Analysts polled by FactSet had forecast earnings of $27.68 per share on revenue of $72.3 billion, according to Barron’s. The company reported EPS of $30.69, according to the release.

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Following the release, CFRA Research said it was maintaining its “strong buy” opinion on the company.

Angelo Zino, CFRA Research senior industry analyst, wrote in a note sent to GOBankingRates that CFRA raised its 2022 EPS view to $116.30 from $114.57 and keeps 2023 at $136.18.

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“After posting better than expected Q4 results last night, led again by upside from its Search business, we come away more positive on the secular drivers related to digital ad growth and think GOOG.L appears to be somewhat of a beneficiary from Apple’s recent privacy changes,” Zino wrote in the note. “Despite concerns about the regulatory environment and pressures from higher operating expenses/capital spending, we see further upside to growth driven by rising enterprise budgets, new YouTube experiences (e.g., Shorts and live shopping), and share gain opportunities in the cloud.”

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In terms of the stock split, Alphabet said that its board of directors had approved and declared a 20-for-1 stock split in the form of a one-time special stock dividend on each share of the Company’s Class A, Class B, and Class C stock.

If stockholders approve, each of the company’s stockholders of record at the close of business on July 1 will receive a dividend of 19 additional shares of the same class of stock for every share held on July 15, according to the release.

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The stock stood at $2,944 on Feb. 2. A split would enable more investors to afford investing in Alphabet and it would broaden the company’s audience and reach.  

See: What Is a Stock Split and How Does It Impact Your Portfolio?
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“The reason for the split is it makes our shares more accessible,” Porat said in a conference call with television anchors, according to Bloomberg. “We thought it made sense to do.” Alphabet’s 20-for-1 split would reduce the price of Class A shares to roughly $138, based on the Feb. 1 closing price of $2,752.88, according to Bloomberg, which added that a share of the company hasn’t been that cheap since 2005.

CFRA’s Zino added that that a 20-for-1 stock split “could help improve liquidity and potentially drive GOOG.L’s inclusion into the price-weighted Dow 30 index.”

“While we await further details about the company’s outlook on the earnings call, we believe results coupled with the recent pullback provides an enhanced buying opportunity,” Zino wrote in the note.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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