What typically happens to the stock price of a company that has been broken up? Like say for example, if someone had 1 stock of GOOG, and government decided to break up Alphabet? My guess is that this person would then own 1 stock in each of the companies that Alphabet broke off to. But historically, or theoretically, is it expected that the overall value of that investment would go down? go up? or stay about the same? Like what happened when General Electric was broken up, for example? What do you expect would happen to the value of your stock investment in a company like Alphabet, or Meta (aka Facebook), or Amazon, if those companies were broken up?
If the company is split in half, you get 50% of the one company and 50% of the other. It can get a little more complicated if its not a straight up share split. It could be shares and cash, just cash or any sort of variation.
Thanks, yeah that's more or less what I figured. But I'm also curious — although I know that nobody can know for sure — would you expect the value of say for example, Alphabet stock, to go down drastically if there were signs that the company would be broken up? I've read articles saying that it's not necessarily the case, and that the overall value of the stocks after a split could prove to be higher than just a single stock in Alphabet. But I never know to trust if all these "stock advice" articles are legit, or solicited by someone who has an invested interest in what the article might convey.
If a company chooses to break itself up, it is usually not a bad thing for stockholders. In the case of Alphabet, if they get broken up right now it looks like it would be forced on them. I'm not even sure what they are trying to break up...separate the ad business from the moonshots?
It seems like it would be similar to how Microsoft was broken up back in '98, because different parts of the business work together to stave off competition in a monopolistic way. Like what are the chances of a company competing with Google's search engine, when using an Android phone? So in this case, one could make the case that the Android phone part of the business should be separated from the Google search part. I'm not making this up, these are actual issues being looked at. Similar arguments could be made regarding Amazon. Like what are the chances of an Amazon vendor competing with Amazon if they are both selling a similar product? So they would have to separate their marketplace part with their Amazon Basics online merchant part.
