Decoding The Stock - Alphabet Inc. (GOOGLE)
When it comes to investing in stocks, there are a plethora of options available to investors. From large blue-chip stocks like Apple and Tesla to small and unknown penny stocks, there are several stocks where one can invest their capital. However, the key to successful investing lies in the research and analysis done prior to investing. When it comes to analyzing companies and stocks, people often assume it to be a challenging and time-consuming task. Whereas in reality, analyzing and researching stocks is one of the best things an investor can experience, as this allows you to dive deep and understand the company from its roots, giving you a better picture of the organization and its operations.
Therefore, in order to succeed as an investor and find the perfect growth stocks that can help you create wealth, you need to improve your analysis and research. However, we at Financial Education are here to help you make better investment decisions. When it comes to investing in the information technology sector, Alphabet Inc. – Google; Ticker GOOGL & GOOG, is one of the biggest organizations in this arena. Reorganized as a wholly-owned subsidiary of Alphabet Inc. in 2015, Google is Alphabet’s largest subsidiary. Alphabet Inc. (Google) is one of the largest tech giants in the United States and dominates the tech and internet industry.
With a market capitalization of over $1.7 trillion as of July 2021, Alphabet(Google) is the world’s 5th most valuable company by market cap according to data. Having grown from levels of $1000 during the 2020 Covid Crash to reaching all-time high levels of $2500, Alphabet Inc. has witnessed a powerful bull run. In this article, we shall explore and understand Google and its stock so that you can get a holistic view of this company and make better investment decisions. So, let’s get started!
Understanding the Basics of ALPHABET Inc. (GOOGLE)
Before you decide to invest in any stock, the founder of Financial Education, Jeremy Lefebvre, believes that it is crucial to get a better understanding of the company and how it manages all its operations. Google is an American multinational technology company that specializes in Internet-based services and products, which include a search engine, online advertising technologies, software, cloud computing, hardware, and much more. Google is also considered as one of the big four tech-internet stocks along with Facebook, Amazon, and Apple. Founded in September 1998 by Larry Page and Sergey Brin, Google was created when both the founders were Ph.D. students at Stanford University in California.
Both Larry Page and Sergey Brin own almost 14% of Google’s publicly listed shares and control 56% of the stockholder voting power through the supervoting stock. Google went public in 2004 with an IPO and in 2015, it was reorganized as a wholly-owned subsidiary of Alphabet Inc. Being the largest subsidiary, Google is a holding company for Alphabet’s internet properties and interests. On October 24, 2015, Sundar Pichai was appointed as the CEO of Google replacing Larry Page. The Alphabet Worker’s Union was also founded recently in 2021. The company’s rapid growth since its inception has included products, partnerships, and acquisitions beyond Google’s core search engine; Google Search.
Google offers several products and services for work and productivity that include services like Google Docs, Google Sheets, Google Slides, and their email application; Gmail. Additionally, Google also offers several other services like Google Calendar, Google Drive, Google Duo, Google Chat, Google Earth, and several other services. YouTube is also owned by Google and YouTube ads are one of the major revenue streams for this tech giant. Along with all these services, Google also leads the development of the Android mobile operating system, the Google Chrome web browser, and Chrome OS.
Google.com is the most visited website in the world and several other Google-owned websites like YouTube and Blogger are also amongst the most visited websites in the world. When it comes to the list of the most valuable brands in the world, Google comes in at second rank as per Forbes and fourth by Interbrand.
Creation of Alphabet Inc.
On August 10, 2015, Google announced the decision to create a new public holding company called “Alphabet Inc.”. Headquartered in Mountain View, California, Alphabet Inc. is a multinational conglomerate created to restructure Google’s business and is the parent company of Google and all its subsidiaries. The establishment of Alphabet Inc. was prompted by a desire to make the core Google business “cleaner and more accountable” while allowing greater autonomy to group companies that operate in businesses other than Internet services.
Currently, Alphabet Inc. is the world’s fourth-largest tech company by revenue and also the fifth most valuable company in the world. Sundar Pichai is the current CEO of Google. Alphabet Inc. also consists of several other business subsidiaries of Google that include Calico, X Development, Verily, Nest, Fiber, CapitalG, Makani, and GV.
The Different Share Types
Alphabet Inc. (Google) has three categories of shares, which are the A, B, and C type of shares. Type A and C shares are listed on the NASDAQ stock exchange, while the B shares are held by the co-founders of Google; Larry Page and Sergey Brin among other directors of the company. These shares do not trade publicly and are held privately by the company’s directors and partners. The two ticker symbols for Google’s shares on the NASDAQ stock exchange are –
- Google’s A Shares Ticker– GOOGL
- Google’s C Shares Ticker– GOOG
When Google split its stock in April 2014, the company created A and C shares. While this stock split doubled the shares in float, the price per share was cut in half and made it more accessible to all investors. However, the key difference between the A and C shares is that the holders of A Share or GOOGL get one vote per share, whereas the shareholders of C shares or GOOG do not get any voting rights. In contrast, shareholders of the B shares get 10 votes per share, which means that they hold most of the voting power for Google. Google’s A-shares have frequently traded at a small premium when compared to its C shares, representing that the market does place some value on voting power.
ALPHABET Inc. (GOOGLE) Current Share Price
As of July 2021, Alphabet Inc.’s stock; GOOGL is currently trading at an all-time high level of $2500. Listed on the NASDAQ stock exchange, Alphabet Inc. has a market cap of over $1.7 trillion. According to Financial Education, the stock has been in a consistent uptrend since the beginning of April 2020 and has been rising consistently with minor pullbacks along the way. But, the overall sentiment of this stock has been generally bullish. Where the entire market was crashing in March 2020 due to the Covid 19 pandemic, GOOGL started its uptrend which was fueled by the pandemic and increase in both sales and revenue.
With a market cap of over $1.7 trillion, Alphabet Inc. is the fifth largest company by market cap and is one of the largest blue-chip stocks in the United States. The uptrend has been fueled by several factors that include Google-owned YouTube’s ad revenue and Google Drive among several other factors. With global lockdowns and people locked indoors, watch time and usage of YouTube skyrocketed thus increasing the revenue stream for Google which in turn helped the stock price rise since the beginning of the Covid-19 market crash. GOOGL has recently joined the IBD Leaderboard. The Leaderboard is IBD’s curated list of leading stocks that stand out on technical and fundamental metrics.
As seen in the weekly chart of GOOGL below, the stock has been in a consistent uptrend since the beginning of April 2020. While the stock has witnessed several minor pullbacks along the way, the prominent trend has been bullish and the stock is currently trading at all-time high levels of $2500. Additionally, the stock has been consistently trading above the 200-day exponential moving average which shows that the overall sentiment for this stock is quite bullish.
The stock price has witnessed an increase of more than 130% from April 2020 up until July 2021. As of now, the stock is at its all-time high level of $2500 and the trend seems to be quite powerful. One can expect to witness a small pullback or corrective move in the coming days, but the uptrend shall continue to resume as the overall sentiment for the stock is quite bullish.
Alphabet’s Stock During the 2020 Covid Pandemic
Google’s stock Ticker: GOOGL has witnessed a rise of more than 45% since the end of 2020 and an increase of more than 130% since April 2020. This is an impressive return when compared to the general market return of the S&P 500 where it only rose by 13% since the end of 2020. According to the founder of Financial Education, Jeremy Lefebvre, the stock has been quite bullish despite the pandemic and the Covid-19 market crash.
While the general markets were crashing, GOOGL saw its revenue rise by 20% in 2020 with YouTube ads and Google Cloud being the main segments leading the growth. Similar momentum has continued in 2021 and the company recorded revenue of $55 billion in Q1. The earnings increased to $17.9 billion, compared to $6.8 billion in the same period of the previous year. This momentum is expected to continue throughout 2021.
The coronavirus lead to global lockdowns that affected several businesses and industries while damaging the economy severely. But Google witnessed a huge increase in their revenue from YouTube ads and Google Cloud during this period. This was largely due to the increasing number of audience and users on their video-sharing platform; YouTube. Additionally, the pandemic made people adopt work-from-home and this resulted in increased usage of Google business and productivity services. All this contributed to the increased revenue and sales of Google where it saw a rise of over 20% in 2020.
Why Google’s Bull Run Might Continue
Google’s stock has been in a consistent uptrend since 2020 with minor pullbacks. We at Financial Education believe that this trend might continue throughout 2021 due to the positive market sentiment for this stock and its ever-growing presence in the internet industry. Some of the factors that might help Google’s bull run are –
Google’s Cloud Services
Recently, Google has been making changes to capitalize on the cloud opportunity and has been ramping up its investments. In the latest quarter, the revenues for Google Cloud went from $2.38 billion to $3.4 billion. It certainly helps that the company has a massive global infrastructure and thousands of talented engineers. There is also a wide assortment of services like AI/ML, IoT (Internet of Things), APIs (application programming interfaces), security, big data, containers, compute, and so on. We at Financial Education believe that this is another factor that can help the company and its stock continue its uptrend.
The revenue generated from Google-owned YouTube and its advertising services has become a large contributing factor in Google’s increased revenue. As the pandemic has created a change in trend where more and more people keep themselves occupied on the internet with services such as YouTube, Google has a huge market for advertising, and this sector holds huge potential. This is why YouTube ads is and will be one of the main factors increasing the company’s overall revenue, helping in fueling the bull run.
Google’s Entry into Artificial Intelligence
With Google focusing on artificial intelligence and creating services and products that can disrupt the AI sector, the growth in this area can be huge. Google aspires to create technologies that solve important problems and help people in their daily lives. The company is optimistic about the incredible potential for AI and other advanced technologies to empower people, widely benefit current and future generations, and work for the common good. Additionally, with Alphabet CEO Sundar Pichai’s statement that the company was “AI-first.”, Google has several incredible opportunities waiting in the AI sector that can help with its growth and further development.
Google has barely scratched the surface of its potential. With a positive future outlook and serval growth possibilities in almost every sector that it operates in, Google and its stock are definitely on the rise. We hope that this article provided you with valuable information and a clearer picture of Alphabet Inc. (Google). With all this information, you can make a better and well-informed decision on whether you should invest in Google’s stock or not.
However, before making any investment decisions, be sure to check the current market conditions and other factors that might affect the value of a stock, as investments in the stock market are subject to market risk. If you liked this article, make sure to visit Jeremy Lefebvre’s YouTube channel “Financial Education” for the more informative content! Happy investing!