The stock price of Alphabet Inc Class A (the owner of Google) (GOOGL) has gone up by over 1.80% today till the late morning trading session. The stock closed at $800.71 on Friday.
The California based company is an American multinational conglomerate founded on October 2, 2015, by the two founders of Google, Larry Page and Sergey Brin, with Page serving as CEO and Brin as President. It is the parent company of Google and several other companies previously owned by them. The company is based in Mountain View, California, at Googleplex. The reorganization of Google into Alphabet was completed on October 2, 2015. Alphabet’s portfolio encompasses several industries, including technology, life sciences, investment capital, and research. Some of its subsidiaries include Google, Calico, GV, Google Capital, Verily, X, and Google Fiber. Some of the subsidiaries of Alphabet have altered their names since leaving Google—Google Ventures becoming GV, Google Life Sciences becoming Verily and Google X becoming just X. Following the restructuring Page became CEO of Alphabet while Sundar Pichai took his position as CEO of Google.
Google recently launched a slew of new hardware products including the Pixel phone, Daydream VR headset, etc. This follows the recent launch of a new application to make travel planning and organizing easier, called Google trips. The travel industry is a very large business and apparently, Google wants to find new sources of revenue. But Google is also investing capital and exploiting alternative sources of revenues in many other industries and business sectors, from the health sector and pharmaceuticals, to autonomous vehicles technology and new ventures in startup companies. Investing capital in research and development has both a positive and a negative effect. While exploring new business ideas, technologies, marketing opportunities can provide significant income and boost profitability, there can also be significant delays with respect to returns on the capital invested, with uncertain financial results.
With its ever expanding diversification, the stock of Google has benefited from it. Google has been able to produce five consecutive fiscal years of increasing net income and earnings per share. But the results have been mixed in the recent quarters, as the company missed expectations in three of the last five quarterly earnings releases. Operating margin and net margin have been steadily declining over last 5 years. Return on Equity and Return on Assets have also followed a declining five-year trend. Earnings per share growth for next 3-5 years is estimated to be 15.77%, which is not unrealistic.
Our analysts have given a “HOLD” rating to Google’s stock. The stock is likely to go up this week. Although it shows great potential, however due to the fluctuation, this is not the stock where you want to go all in on.