Let’s say you decide one day to buy stock in Google. You look it up and find there are two tickers: GOOG and GOOGL. What is the difference between the two, and which one should you buy?
First of all, the parent company is now known as Alphabet, so when you want to buy stock in “Google”, you actually buy stock in Alphabet. Google, Inc. is one subsidiary of Alphabet; others include Waymo (self-driving cars), DeepMind (AI) and Google Fiber. Any business that is internet-related reports up through Google, including YouTube, Google Search, and Android.
Voting vs. Non-Voting
The main difference between GOOG and GOOGL is that owners of GOOGL have a right to vote in corporate elections whereas owners of GOOG do not have such a right. The difference resulted from founder/owners Larry Page and Sergey Brin’s desire to retain as much voting control over their company as they could. Alphabet actually has 3 classes of stock, summarized here as follows
- Class A: GOOGL – Has Voting Rights
- Class B: Owned entirely by Brin and Page. Have 10 votes for every 1 vote of owners of GOOGL, thus ensuring control by Brin and Page
- Class C: GOOG – No voting rights, but has the same claim on corporate earnings as the other Classes of stock.
Which One to Buy?
If you want a vote in corporate issues, then buy GOOGL. If you just want to participate in the awesome company Brin and Page created and don’t care to participate in corporate elections, then buy GOOG. Because of their voting rights, GOOGL is typically priced very slightly higher than GOOG from a P/E standpoint, but the difference is less than 1%. The current P/E difference is 0.26% (34.46 times earnings for GOOGL and 34.20 times earnings for GOOG, according to macrotrends.net). So you are not paying very much more per share for GOOGL and you get the voting rights. That sounds like a better deal to me, but it can be a pain to vote in proxy elections, so if you want to avoid the hassle of voting, buy GOOG. Either way, you get the same company.