Google dropped a big news yesterday, about its morphism into a parent conglomerate named Alphabet. The news, which already has created waves in the tech industry, seems to have made even investors pretty much happy. As a result, Google’s stock soared by 7 Percent, to close at a high of $708 during after-ours trading.
The stock, which had a previous day closing of $663.14, upped by precisely 6.78% to close at $708 in after-hours trading.
Talking about investor reactions on this development, Roger Kay, an analyst at Endpoint Technologies Associates told Reuters,
They are aware that they’ve got this hodgepodge of companies. Maybe it’s better to sort them out a bit and make it clearer which ones are bringing in the bacon and which ones are science projects and which ones are long-term bets.
Investor happiness also stems from the fact, that the Wall Street will now get to have an even deeper look into Google’s side businesses, most importantly its secretive Google X Lab and other similar divisions. Google on the other hand, will now get more focused towards its experimental divisions as their performance and financial numbers will now hugely impact the stock prices of both Google, and the parent company of those experimental divisions, Alphabet.
Google, founded by Sergey Bin and Larry Page in 1998, currently employs over 57,000 people across the globe in its various divisions.
As a part of this latest restructuring, the Google unit will encompass the core search engine as well Google Maps and YouTube. While in addition to Google X, the company’s new ventures such as Calico, which focuses on longevity, and connected home products maker Nest will be managed separately. Other units that are part of the new structure include Fiber, for its high-speed Internet efforts, venture capital arm Google Ventures, and Google Capital, which invests in larger tech companies.
All of these, will eventually form the new Alphabet.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Google’s previous two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.