Why do some stocks have multiple tickers?

Jrich · Jul 10, 2017

I always wondered this, figured i would finally ask

Why are there 2 Googles?... 2 Berkshire Hathaways?... And like 20 Royal Dutch Shells???

Ive seen others, but cant remember all of them

T0rm3nted · Jul 10, 2017

I've never really looked it up for any reason until you just asked. Seems like they're just different kinds of shares. In GOOG/GOOGL example, one has voting rights as a shareholder, the other does not. You can read more here, but I'll quote the whole article below: http://www.investopedia.com/articles/markets/052215/goog-or-googl-which-google-should-you-buy.asp

There's little price difference between the two — as of June 2, 2017, it was $996.12 vs. $975.60, respectively — still, what gives?

The short answer is a stock split, but a longer one is an attempt by the co-founders of Google, Sergey Brin and Larry Page, along with company chairman Eric Schmidt, to retain as much control of the company as possible. (For more, see: Google: Should it Be Part of Your Portfolio?)

The two tickers represent two different share classes: A (GOOGL) and C (GOOG). The B shares are owned by insiders and don't trade on the public markets. It's those B shares that are still in the possession of Brin, Page, Schmidt, and a couple other directors.

Class Inequities
Google split its stock in April 2014, which created the A and C shares. Like any other one-for-one split, the number of shares doubled and the price dropped in half. There is, however, one crucial difference. A shares get one vote, C shares get none and B shares get 10 votes. Anyone who held A shares at the time of the split got an equal number of C shares. But their voting power did not increase. (For related reading, see: What Happens When Your Stock Splits.)

With 288 million A shares outstanding, and 52 million B shares, that means the B share holders get 520 million votes, or 64% of the voting power. So if you want a say at the shareholders meeting, buy the A shares. They trade at a slight premium, which shows that the market does place some value on voting power. See the difference in the chart below:

Note that the A shares consistently trade at a premium to the C shares. The difference is not large — perhaps 2% at most — but it is there. Google plans to continue issuing C shares to finance acquisitions and reward employees, so it's far from clear whether the market will price the C shares at larger discounts in coming years or simply bake in the current difference at a few percentage points. (For related reading, see: Do Stock Splits and Stock Dividends Affect Stockholder Equity?)

Class C
There was one twist that came with owning the C shares. In part to quiet some stockholders' objections to the original split, Google promised to compensate C class shareholders if the price of their shares fell more than 1% below those of A shares a year after the split. While the difference isn't huge, it did exist. (For related reading, see: How Did Larry Page Amass His Wealth?)

What about the B shares? Brin and Page owned some 46 million B shares at the end of January 2015, but they announced a plan to sell some of that. In March 2015 there were some 52 million B shares outstanding, but Securities and Exchange Commission (SEC) filings showed that Brin converted a total of 48,998 B shares to A shares towards the end of April, to be sold over a period of time. This reduces his voting control of the company somewhat.

The upshot is that Google allows investors to buy a very large share of its equity. Control of the company, though, not so much. Some investors are willing to accept that because Google, like Apple Inc. (AAPL)
is very much a bet on its founders and executives. Other companies may be like that too, but in Silicon Valley it's particularly salient because so many firms are based on one person's big idea. (For related reading, see: Tech Startups Finding Homes Outside Silicon Valley.)

Not every investor will be so sanguine, however. There are surely many who see some of Google's more out-there ventures — the investment in SpaceX, driverless cars — as a distraction from its core search and advertising business that drives the company's revenues and reputation. (For more, see: How Google's Self-Driving Car Will Change Everything.)

The Bottom Line
There's definitely a difference between the price of the two types of Google shares you can buy, though it is relatively small. If voting at the stockholders meeting is important to you, aim for the A shares.
Click to expand...

T0rm3nted · Jul 10, 2017

I would imagine most stocks with multiple listings are for the same reason. The only other one that comes to mind off the top of my head is UA/UAA other than the ones you listed.

Jrich · Jul 11, 2017

Ahhhhh.... sneaky Google

Kinda reminds me of what Justin Timberlake did in that Facebook movie

Id assume all the other companies with multiple symbols have similar reasoning

Why do some stocks have multiple tickers?

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