GOOGLE - Stocks

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The Internet has become an essential resource in the world and allows people to communicate, find information, and perform numerous activities. The Internet has also helped to provide a seamless business network and a social platform for people to connect and interact. The first thing that comes to mind when people think about the Internet or searching for something is ‘Google.’

Alphabet Inc. is the parent company of ‘Google’ and a large American conglomerate that is based in Mountain View, California. Google is one of the biggest business company and technology firm in the world. Google is the largest search engine in the world with a 75% market share, and the company excels in providing internet search-related services.

Many people may think Google is just a search engine, but founder Larry Page refers to the company as a technology giant offering products and services in nearly every field, whether it is personal communication or business. With time and advancement of technology, Google has been able to deliver a broad range of products that includes

• Web browser
• Email services
• Online advertising
• Cloud computing for business along with cloud storage for common users and businesses
• Calendar
• YouTube where people watch thousands of videos and get entertained
• Photo editing software
• Word processing
• Smartphone operating system ‘Android.’
• Language translation service
• Video conferencing software
• Live stream of videos and newsfeed
• Digital library
• Web mapping service that helps people in navigation
• Smartphone series called ‘Google Pixel’ and other smart devices
• Voice-based search service and Artificial Intelligence Assistant

Google is one of the members ‘Big Four’ that consists of the largest US technology companies, along with Apple, Microsoft, and Amazon. Google is also part of ‘FAANG’ that refers to the biggest business companies according to market capitalization and includes Facebook, Amazon, Apple, Netflix, and Google.

Google has 69 offices in the US and Canada, around 41 offices in Europe, 8 offices in South America, and nearly 28 offices in the Asia-Pacific region. The company has almost 120,000 employees. Google has been named the most valuable brand in the world after Apple by Interbrand’s Global Brands Report in 2013, 2014, 2015, and 2016. To date, Google remains the most visited website in the world.

History of Google

Google was initially a university research project of Larry Page and Sergey Brin, who were Ph.D. students at Stanford University in 1996. The precursor called ‘BackRub’ of the search engine is made in 1997. Google was founded in 1998, and the company was incorporated as a privately held company on September 4, 1998. The first office of the company was in a garage in Menlo Park, California but the head office moved from Palo Alto to Mountain View in California.

While most search engines give results according to the number of times a webpage has been accessed, Page and Brin emphasized developing the relationship between webpages, and both introduced an advanced system called ‘PageRank.’ Both of them offered their search engine project to Excite in 1999 for $750,000, but the offer was rejected. On the contrary, Alphabet Inc., the current parent company of Google, is worth $650 billion.

In 2000, Google not only becomes the largest search engine but is named the Best Search Engine by Yahoo Internet Life magazine. The famous Google Toolbar was also launched in 2000. By the end of 2000, Google had a record or storage of over 1 billion documents in its search engine. In 2001, Google Images was introduced, and in 2004, the key service ‘Gmail’ was launched that is used by billions of people daily.

In the 2000s, the technology was advancing at a rapid pace, and Google was revolutionizing the Internet for current and future users. The achievements and acquisitions of Google in the period of the 2000s include introducing Google Maps/Google Earth/Google Drive/Google AdSense/Android System and acquiring YouTube in 2006.

Google incorporated again on October 22, 2002, in Delaware, and Initial Public Offering (IPO) was held on August 19, 2004, and the head office of the company was named ‘Googleplex’ and shifted to Mountain View, California. Google said to take assistance from Goldman Sachs and Morgan Stanley to arrange IPO, and the expectation was to raise $4 billion. The stock value was priced at $85 per Share, and almost 19.5 million shares were offered for trading purposes.

Google acquired Waze for $966 million, but ‘Waze’ performed independently and served as a crowdsourced location platform. In January 2014, Google bought DeepMind Technologies, which was an artificial intelligence firm based in London.

In 2015, Google announced to restructure the organization and reorganize its various segments under one umbrella called ‘Alphabet Inc.’ Google is the central and leading subsidiary of Alphabet Inc. whose CEO is Larry Page and president in Sergey Brin.

There are three types of Google shares, called Class A-Shares, Class B-Shares, and Class C-Shares. The A and C Shares are commonly traded on a wide number of exchanges while B shares are internally held by the company and not publicly traded. The classification of shares is due to stock split in 2014. The Class A-Shares present voting rights, while there is no voting right for Class C-Shares.

Current Business and Investment of Google

Alphabet Inc. is the US multinational conglomerate that is a holding company that manages Google and its Internet-related products and services, along with Access, Nest, Calico, GV, CapitalG, Waymo, Verily, and X. The main division of Alphabet Inc. is Google, which in itself holds hundreds of different Internet-based products, services, and applications.

• Verily was previously a division of Google X and emphasize on development of health sector
• Google Fiber is part of the Access and Energy division and involved in providing internet facility
• Jigsaw overlooks global problems such as extremism and harassment
• Sidewalk Labs focuses on providing urban development solutions
• Calico is part of the Health sector and addressing aging concerns in humans

Google is involved in delivering wide Internet-based options to millions of people around the globe, and the company is a leader of providing email services, sales of digital content, cloud offerings, advertising, and news and navigation services. The core products and services of Google include Gmail, Google Chrome, Google Maps, YouTube, Android, Google Cloud, Google Play, Google Search, and Ads.

Alphabet Inc. has another segment called ‘Other Bets’ that manages

• Google Fiber, which is a service that provides internet and television services
• Sales of Nest products and services
• Research and Development (R&D) and Licensing through Verily

Google also constantly brings innovative features to users, and the best example is Google Assistant, where people can just talk and type when searching something, and Google Photos allows you to manage your pictures effectively. The list of popular Google products, services, acquisitions, and applications are

• Google Search for searching for information about anything and everything
• Gmail, for fast, easy, and reliable communication
• Google Docs, and Sheets for productivity and work-related tasks
• Google Drive offering cloud storage for common users and business employees
• Google Calendar for maintaining schedules and proper time management
• Google Hangouts and Meet providing instant messaging and video chat.
• Google Translate that supports translation of 109 languages
• Google Maps provides mapping and navigation services used by millions of people every day
• Google Podcast services for hosting podcasts
• Google Keep for writing and saving keynotes
• Google Blogger for blog writing and publishing
• Android Operating system that is used in millions of smartphones that people own and use
• Google Chrome is one of the most popular and commonly used web browsers
• Smart and innovative devices such as Pixel Smartphones, Google Home, Google Wi-Fi, and Google Daydream

Google manages and runs huge data centers in North and South America and in Asia and Europe to streamline its services and ensure a seamless flow of services. Google is also a leader when it comes to renewable energy, and since 2017 all the data centers are run on solar power and wind power.

Risk and Potential in Google Environment

Google is surely one of the most popular business companies and synonymous when anyone says the word ‘internet.’ Google is so popular that whenever someone wants to know about something, the answer that comes is just ‘Google It,’ which means you can search and know about anything and everything with the help of Google.

Google has been in the business for just 21 years but has become the largest business empire and more valuable than other large organizations that have been in business for more than 50 years. Google surpassed Amazon as the most valuable brand in 2017, but it got considerable criticism due to privacy issues, censorship, and tax avoidance.

Google is the most technologically advanced and successful business company in the world that serves a wide range of market segments such as the Internet, Consumer Electronics, Computer Software, Venture Capital, and Healthcare. The SWOT analysis of Google is given as

• Strengths

Google has complete dominance when it comes to the search engine, and it has more than 75% market share. Google is a global leader, and no company has the resources or ability to challenge the dominance of Google. The company has diversified its products and services with time, and people are compelled to use them for their ease and convenience. Google developed the Android operating system, which is used in every smartphone except on the Apple iPhones.

• Weaknesses

Google depends heavily on advertising for revenue generation, and it could be a problem in the future, and the company should focus on the development of other key business functions. Google has to constantly face criticism and allegations that some of its Ads and YouTube videos promote extremism and hate among the community. Apart from common users, many notable companies have also boycotted the search engine such as Johnson & Johnson, Marks & Spencer, Audi, Tesco, Volkswagen, and AT&T. Google also relies heavily on revenue from online technologies, and there is no physical store for the sale of Google’s consumer products.

• Opportunities

Google is already occupied in a diverse field of technology that it does not need to invest in some other field. The wearable market, including the smartwatches and smart bands, is having a boom, and Google acquired Fitbit to compete with Apple and Samsung. Google can further enhance the Android operating system and directly compete with Apple operating system. Google can diversify its services by offering a non-Ad business model to ensure sustainable revenue in the future. The company can also open brick and mortar stores where it can offer its exclusive products and technical assistance to users.

• Threats

Google faces frequent pressure and challenges from changing regulations from the US government and international community regarding data privacy concerns, censorship. Google also faces competition from rival domestic brands. When it comes to search engines, Google faces competition from Microsoft Bing, Yahoo, and Baidu. Google’s YouTube faces challenges from Netflix, Vimeo, and Hulu for video content and Facebook, Twitter, and Instagram when it comes to social media platforms. Due to a massive portfolio of products and services, on the overall perspective and market capitalization, Google has Amazon, Apple, as its biggest competitor.

Stock Analysis of Google

Google is listed and actively trades on the NASDAQ with the ticker symbols ‘GOOGL’ for Class A-Shares and ‘GOOG’ for Class C-Shares. The company is listed under the ‘Technology Services’ Sector, and the industry is ‘Internet Software/Services.’ Google is also a member of other indices such as the NASDAQ-100 Index, S&P-100 Index, and the S&P-500 Index.

The all-time high share price of Google was $1564.85 on July 22, 2020, and the average price in the last 52 weeks is $1334.32.

The quarterly earnings and financial performance of Google are two vital factors that determine its stock value. With the spread of the Coronavirus pandemic, Google announced to implement numerous cost-cutting strategies such as slowing the hiring process for the remaining 2020 period and focusing on the investments and development of data centers.

The share value and overall financial performance were significantly affected by the Covid-19 outbreak, but the company posted rise and broke the all-time record from July 10, 2020 onwards, and touched its highest share price of $1564.85 on July 22, 2020. Alphabet, the parent company of Google, posted Q2 results where the earnings of Google were down 32% to $7.91 per share, and revenue also fell 4.5% to $37.2 billion.

Most of the revenue is generated through digital advertising, cloud computing, and consumer hardware. The company invests heavily in artificial intelligence, cloud computing, YouTube, and other consumer products. The gross revenue of Google reached $41.15 billion, with a 13% increase. The revenue from YouTube was $4.03 billion with a 33% increase. The cloud computing service led to $2.78 billion, with a 52% increase. Google Properties also rose and touched $28.54 billion, with 11.6%.

Google is such a massive business company and leader in technology and software services that apart from minor economic downturns, the company still manages to come back strong. The Coronavirus pandemic badly affected nearly every business, but Google’s stock rallied and surged again once when the lockdown restrictions were eased, and businesses all over the world are resuming.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.