 Hello and welcome to this recording in which we will discuss Alphabet earnings report specifically. They declared 24-1 stock split. But in addition to the stock split, I want to show you how companies report their earnings. Just use some accounting terminology that we use in our classes and on the CPA exam to see how this information is really used in the real world. So let's take a look at the earnings, the earnings of Google. So what they report is earnings per share EPS which you need to know how to compute this. The market was expecting $27.40 dollar per share earnings per share. Google came at $30 and 69 cents. So they beat on earnings revenue. This Wall Street was expecting 72.17 billion for this quarter. They came at 75.33 YouTube advertising revenue, which is most likely you are watching this video on YouTube. The expectation was 8.87. They came a little bit shy of that. They reported 8.63. And if you want to know, you can read about this in the article. Google Cloud, they beat on Google Cloud. And traffic acquisition, the expectation was 12.8413.43. So the first thing I want to show you is how they are reporting different segment of the business. Why this is important? Because the investors want wants to know, how is YouTube doing? Because YouTube is part of Google. How is their cloud business doing? Those are major, major component of the business. So that's why that's why they segmented this information. Also, let's talk about the stock split because that's important too, because this is what I want to talk about mostly. Again, Google did a stock split now, 24-1 stock split. It means if you have one share, at some point you're going to wake up and have 20 shares. Well, what does that mean? Are you better off as an investor with Google? In the immediate time, not really, because what's going to happen is if Apple is trading at $3,000, which is $3,000 at $5, and $5, let's assume it's trading at $3,000, what's going to happen? The price will be split in 20. So it will be trading at 150. You'll have more shares, 19 additional shares for every share you have, but the stock price will be split. Now, the other thing interesting about Google, which is that's why I wanted to go over this, is there are different classes of stocks. Google has class A, class B, and class C. So I want to show you the different classes because most companies, they will have maybe common stock and preferred stock. Google is a little bit different. They have class A, class B, and class C, and let's talk about those. So if you own class C stocks, you have no voting rights whatsoever, if you own class C stocks. Now, if you own class B, class B shares, and those are the shares that are hauled by the founders and early investors, each share you have, you will have 10 votes. So notice, truly, who owns the company? People with class B, people with class B. And class A, you have one vote per stock. So obviously, class B are in control of the company, because in the article that says they need shareholders approval, well, basically, if they declare that it means class B will vote on that, class B will vote on that. Now, also, why, from a business perspective, why did Google undertake the stocks? But we really don't know why, but we can guess. One thing is, if the stock price is too high, for example, 3,000 psychologically, this could be too high for many investors. For example, some investors, they don't buy any stock above 300 or 400. So this way, they will make it more attractive. That's one reason, the psychological reason. But the true reason that people think Google went through a stock split 24-1 is because the Dow industrial, the Dow Jones companies, the Dow 30, which is an index, stock index, and the Dow industrial is a weighted stock index. What does mean weighted? It's stock price weighted. It means the companies that constitute the Dow, well, they are weighted by price. Well, let's take a look at the list. These are the 30 companies that compose the Dow now. So obviously, if Google joins them, one of these companies will have to be removed. But let me show you. These are sorted by weight. For example, United Group Incorporated, their stock price is $468.41. This is the closing today. It weigh 8.8%. So when United Health Group Incorporated moves up or down, it really influenced the Dow 30. Why? Because the price is $468 and the Dow industrial is price weighted, not market cap weighted, which is the Nasdaq is market cap weighted, but this is price weighted. If we look at the bottom of the list, for example, we look at Intel. Intel trading at $48.59, Intel represent less than 1% of the Dow. In other words, when Intel moves, the Dow is not affected that much. If we look at other prices, let's see if we can find Apple. Apple is $174.58. It represents 3.27 of the Dow. Now, Apple represent almost 15 to 20% of the Nasdaq, but from the Dow, it only represents a small part because it's price sensitive. Therefore, the Dow cannot add Google. If Google is trading at $3,000, if Google is trading at $3,000, it will influence all everything. So it will be weighted, I don't know. You need maybe 10, 15, 20 companies to equal weight the weight of Google, but once the stock is 150, then the Dow will include Google as part of their stocks. And this is basically what a stock split is. There's no journal entry. Once again, they will increase the number of shares outstanding and there's a memo for it, but this is basically how it works. At the end of this recording, I would like to remind you, if you are an accounting student or a CPA candidate, to take a look at my website, farhatlectures.com. I can help you understand the material better, prepare for the CPA exam. You should invest in yourself, invest in your career. Good luck, study hard, and of course, stay safe.