Google stock is expensive. We’ll just get right to the point. It’s been long touted as a growth company in the technology sector, as it’s constantly expanding to include products like driverless cars, Google Glass and “internet balloons.”
Buying stock in Google, referred to on Wall Street as Alphabet Inc (NASDAQ: GOOGL) will certainly add a name to your portfolio that you can brag about to your friends. But should you buy in?
Buy Google Stock
Here’s a bit of trivia for you. In 1996, there were only 257,601 websites. If you wanted to search the internet when it was just a baby, you’d use one of the classics – Dogpile, Yahoo! And Ask Jeeves were all popular search engines at that time. Users could also access content through AOL or ping their friends via ICQ. The internet was tiny, but it was growing very quickly.
By 1998, there were 2,410,067 unique websites in existence, and the internet was becoming more accessible. Literally anyone could create a webpage if they just had fast enough dial up. Hosting was just as inexpensive as it is today, and a wannabe developer could register (sometimes outright buy) and host a domain for about 30 bucks per year.
Enter Google. Founded in 1998, Google added its name to the list of web search competitors. PhDs Larry Page and Sergey Brin began Google as a research project from the campus of Stanford University, and in August of 1998, they received their first contribution. Andy Bechtolsheim of Sun Microsystems invested $100,000 in the project development, and other contributors soon followed suit. Jeff Bezos of Amazon (NASDAQ: AMZN) was among them.
In 2004, Google issued its IPO- investors could buy shares in Google for $85. Now, 19 years later, the stock has gained over 1700%.
Google Stock Price
At the time this article was written, stock in Alphabet Inc was priced at about $850 per share. But over the past 12 months, the stock has varied in value from a low of $681 and reaching a high of $872 in March of this year.
If you’re looking for a short term investment, Google could possibly be described as volatile, losing as much as $100 in value over the course of a month’s time. But looking at the long term growth of this stock, it’s a viable option for a shareholder who’s willing to wait to see an investment pay off.
Furthermore, Google does not pay dividends to its shareholders. Over 13% of its revenues are spent on research and development; Google is trying to grow, and has announced that it would like to acquire foreign companies and technology rights to the tune of $20 billion, as well as continue its own research.
Google Stock Price History
For a company to be a player in the tech sector, it’s becoming more and more necessary to expand product offerings beyond just a single focus. There are always exceptions; IBM, for example, has built a solid reputation in the markets as it’s focused on hardware and components. But as a rule, and as humans expand the capabilities of what technology can do, it’s best practice for a business plan to include a broad range.
Google is at the forefront of the technology sector, but it’s not only a search engine. The company doesn’t describe others such as Yahoo! (NASDAQ: YHOO) or Twitter (NYSE: TWTR) as competitors. These companies have retained a focus on news, social media and email services.
Instead, Google has cited companies such as Amazon (NASDAQ: AMZN). Apple (NASDAQ: AAPL) and Facebook (NASDAQ: FB) as the biggest rivals. All four companies have expanded their products to include those such as hardware and mobile phones, virtual reality, web services and computing platforms.
That said, Google faces the problem that it’s still, at heart, a search engine. As companies like Amazon strengthen their search functionalities, even to include search results from competitors, fewer consumers are turning to Google as a first choice for their search. A full 88% of Google’s revenue comes from CPC (cot per click), or the price that Google can charge businesses for ads. Because of the competition, Google’s CPC has been declining.
CPC is only one factor impacting the company’s revenue. Competition also exists with Apple as the iPhone and Android devices fight for market share and with Facebook as the sites compete for traffic. Competition with Amazon for actual retail sales and consumer analytics software has the most impact on Google stocks.
Google Stock Quote
The current price of Alphabet stock is around $850. Over the course of its history, the company has seen only three annual losses – in 2008, the loss was huge at 55.51%. The other two were in 2010 and 2014 and were only about 5% each. Overall, GOOGL stock has performed well each year, and has been a solid investment for those who own stock.
A concern of analysts is that Google will go the way of Yahoo! and others, becoming a bit of a one hit wonder. In order to achieve success and remain a strong competitor to its rivals, it’s critical that Google continue to seek sources of revenue in addition to its CPC, as a shift in advertising could quickly and negatively impact Google.
As mentioned, though, Google is making sure it stays a major contender for the top tech stocks. Google X, an Alphabet subsidiary, has a few interesting projects in the works. Along with an Android smartwatch update and a new Android based gaming system, the company has toyed with research for a space elevator and renewable energy. (Yep. An elevator to space.)
Google Stock Symbol
Google, or Alphabet Inc, is traded under two ticker symbols on NASDAQ. These are GOOGL and GOOG. There are three classes of shares, labelled A, B and C. B stocks are held primarily by Google directors and other insiders, and they aren’t traded on the public market. If you want to buy shares in Google, you’ll buy either A or C shares.
Class A shares have voting rights, while Class C shares in Google do not hold rights.
Google Stock Class A
Back in April of 2014, Google split its stock, resulting in the creation of A shares and C shares. (B shares were always in existence.) It was a 1:1 split, and the price of the stock dropped in half. But Google didn’t want to increase the voting power of its investors, and thus created the C shares. Everyone who held shares in Google at the time of the split received an equal number of A and C shares, keeping the voting power of each investor the same as it had been prior to the split.
Class A shares in Google are traded at a premium. While the difference in Classes A and C are not huge, they’re about 2% and can make a difference in your portfolio.
Google Stock Split
Some companies choose to periodically split their shares in order to diminish the cost of each share. Not so with Google. Google has only split its stock once, and it took two full years after the split announcement for the company to follow through.
The split itself was somewhat controversial, because of the decision by the company to create a new class of shares. Class B shares, held by Google execs, carry 10 votes each. Class A shares carry 1. In order for Google executives to retain the voting majority, the newly created Class C shares would come with no voting power.
Institutional investors didn’t find this too appealing, and litigation ensued. Google settled the lawsuit by offering compensation to Class C shareholders to offset any loss caused by the split. Despite the controversy surrounding the company’s first stock split, the structure became a model for other organizations to follow. In 2016, Facebook shareholders approved a 3:1 stock split which would create a new C class of shares.
Google Stock Price Today
There haven’t been any plans announced to split Google shares again. But prices are rising quickly, and analysts predict that the company may consider it once again once Google stock prices reach $1000. And at a current price of $850 per share, that may not be too far in the future.
The company keeps seeing an increase in revenue, too. Google announced that the 4th quarter of 2016 saw a 22% year on year increase in revenue and 24% on a constant currency basis.
Investors and analysts agree that Google is a growth stock. But there are others in the industry. Apple, Twitter (NYSE:TWTR), Yelp (NYSE: YELP) and Alibaba (NYSE: BABA) are a few, and Google’s got to mind the competition.
You can keep an eye on Google stock prices using the ticker below.
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