- Alphabet will enact a 20-for-1 share split on Friday.
- As a result, the shares will be much more affordable for investors.
- At least four prominent analysts have issued "buy" ratings on Alphabet stock during the past month.
Google parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is generating a lot of excitement this week. The company will enact a stock split this Friday, July 15. Several Wall Street analysts have issued “buy” ratings and optimistic price targets on Alphabet stock.
Alphabet’s 20-for-1 share split won’t suddenly make current stockholders poorer. Rather, they’ll have many more shares, and those shares will be much less expensive. So, technically speaking, the split won’t affect the value of the investors’ current holdings.
Yet, it’s possible that Alphabet stock could get a price bump for other reasons. Imagine if the shares only cost $113 apiece instead of $2,260. This would make the stock much more affordable for retail investors with smaller account sizes.
Besides, the stock will just seem cheaper, even if the objective value of the shares hasn’t actually changed. Granted, some brokers offer fractional shares, but this isn’t available to everyone. Therefore, Alphabet’s stock split could prove to be a significant event on Wall Street.
What Do Analysts Predict for Alphabet Stock?
Of course, enacting a stock split doesn’t eliminate Google’s problems. Due to the threat of a possible recession, CEO Sundar Pichai revealed that the company intends to cut back on hiring for the remainder of this year.
High inflation and supply-chain issues will undoubtedly continue to create problems for Alphabet. Nevertheless, at least four analysts expect Alphabet stock to move higher.
Cowen’s John Blackledge, Evercore’s Mark Mahaney, JPMorgan’s Doug Anmuth and UBS’s Lloyd Walmsley all reiterated “buy” ratings on Alphabet shares during the past month. The price targets set for the stock were $3,000 for Blackledge, $3,300 for Mahaney, $2,800 for Anmuth and $2,650 for Walmsley.
Specific analyst commentary on Alphabet remained elusive, but perhaps these Wall Street experts expect investors to jump on Alphabet stock after the split. Bank of America reportedly calculated that companies’ share prices increase 7.8% on average during the three months after they announce stock splits.
Traders might not want to act too quickly, though, since Alphabet is set to report its second-quarter 2022 earnings on July 26. This event could have a major impact on the GOOG and GOOGL share prices. So, feel free to enjoy this “summer of splits,” but as always, invest carefully.
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