Alphabet, better known as Google’s parent company, has had a lot of success in the last decade. But is Alphabet Inc a good investment in 2022? Will Alphabet stock go up or not? Well, you’ll get your answers here. This article will guide you through the fundamentals of Alphabet Inc, the pros and cons as to why buy Alphabet stock. Also we will discuss reasons that will give a clear idea of whether Alphabet is a good investment or not.
Let’s check it out.
Brief About Alphabet Inc Company
Alphabet inc is an American multinational technology company holding many subsidiaries. Just like Berkshire Hathaway, even Alphabet has many companies under its name. Alphabet Inc headquarters are in Mountain View, California. In Alphabet Inc, number of employees in 2021 was 1,56,000. According to Fortune Global 500, Alphabet Inc bagged 21st rank among many other companies. Currently, Sundar Pichai is the CEO of Alphabet Inc and Google.
The history of the company goes a little twisted. Years ago, on October 5, 2015, Larry Page and Sergey Brin founded Alphabet Inc. Before 2015; there was no such company in the market. One fine day, the former executive Eric Schmidt thought of creating such a parent or lead company. He encouraged Page and Brin to talk with Warren Buffett to see how a holding company like Berkshire Hathaway operates. Thus, Larry and Sergey formed Alphabet Inc. The main motive was to restructure the business and activities of Google and transfer it to a parent company.
Price History Of Alphabet Inc
Now that you know briefly about Alphabet Inc, let’s look at the Alphabet stock share price history. But before looking at the price history, let’s understand the structure of Alphabet Inc stocks. Earlier, Google stocks were operating in the market. Google listed its Class A shares publicly in 2004 under the ticker symbol “GOOG.” But in 2014, the company announced a splitting of shares. And this gave rise to new Class C shares under the ticker symbol “GOOG.” Whereas Class A shares were re-named as “GOOGL.”
However, after the formation of Alphabet Inc, Google decided to convert its shares to Alphabet stocks. Currently, the Alphabet Inc ticker symbols are “GOOGL” and “GOOG.” Besides that, as of March 29, 2022, the Alphabet Inc market cap is 1.87 trillion. As per the reports, most of Alphabet Inc ownership stays with Vanguard with a 6.4% share. Therefore, it makes Alphabet Inc a good investment for investors and a reason to buy Alphabet stock.
Performance Of Alphabet Inc Stocks (2014-2022)
Alphabet Inc trades Class A (GOOG) and Class C (GOOGL) shares. Firstly, let’s discuss the Class A shares. Class A shares were listed in 2004. The price of the stock in September 2004 was $64.56. However, the graph was relatively steady for a few years. This had pushed the prices from $64.56 to $241.52 in August 2009. In 2014, when there was a split in the A shares, the price was $555.45. There was an upward trend noticed in the graph. Thus, in the next few years (2010-2016), the prices rose from $263.4 to $742.9.
Similarly, this was the case with Class C shares (GOOGL) of Alphabet Inc. When the Alphabet stock was listed in the Nasdaq Global Select Market, the price (i.e., 2004) was $50.05. Currently, the price of Alphabet stock (GOOG and GOOGL) as of March 30, 2022, is $2865 and $2850.11. We can conclude that Class C shares follow Class A shares. So, if there is hype in the GOOG shares, even the GOOGL shares will face the same. Thus, urging people to buy Alphabet stocks.
Fundamental Analysis Of Alphabet (Google)
As per the annual reports of Alphabet Inc, there has been a significant increase in the company’s total revenues in the past 18 years. In 2004, the total revenues of Alphabet Inc were $3.18 billion. As of December 31, 2021, the total revenues were $257.63 billion. As compared to 2020, there was an increase of 41.15%. Besides that, the company has cash of about $139.6 million, which can surely be utilized for either acquisition or purchase of inventory. And yes, Alphabet in 2022 has brought two new cybersecurity companies.
The same was the case with earnings also. The earnings of Alphabet Inc in 2021 were $91.15 billion, while in 2020, it was $54.92 billion. There was an increase of 65.97% in Alphabet Inc’s earnings compared to last year. The EPS of Alphabet Inc as of December 31, 2021, was $112.20. An approx increase of 91.43% as compared to 2020. This states that if you buy Alphabet stock, there are likely good chances that you will get good returns on it.
Is Alphabet Inc A Good Investment In 2022?
Well, this is quite a straightforward question, Is Alphabet Inc a good investment or not? And the answer is Yes. Because there are certain reasons to state this fact. The first and foremost factor is Google, one of the top Alphabet Inc subsidiaries. Not to mention, as per NetMarketshare, the market share of the Google search engine is 78.39% as compared to other engines. Google’s Android has the largest market share of 84.8%. Be it Youtube, Google Maps, Meets, Google cloud, the number of users is increasing each day. The customer base of Google is just insane having maximum users from the USA.
Secondly, the financials and the stocks prices of Alphabet Inc are doing pretty well in the past years. At a time, when the Alphabet stock price was $64 in 2004, now the price (March 2022) is $2860. Even the revenue and earnings saw an increase of 41.15% and 65.97% from 2020. In contrast, Alphabet Inc has a huge potential to do well in the future. There are many new projects and acquisitions piled up that makes Alphabet Inc a good investment option for investors.
Why Buy Alphabet Stock? Pros And Cons
Now that you know briefly about Alphabet Inc’s financials and stock prices, let’s understand why buy Alphabet stock, the pros, and cons of buying this stock. Let’s check it out.
Higher price to earnings (PE) ratio of 25.40 times
No dividends to the shareholders
Higher EPS of 112.23 times
Losses in Google’s cloud business
Wide acceptance of AlphAlphabet’sducts
Uncertain capital allocation strategy
Increasing graph of revenues and share prices
Will Alphabet Stock Go Up?
One question that leads in every mind is, Will Alphabet stock go up? Are there any chances for Alphabet stock to shoot up the sky? Well, the answer is Yes. To state this fact, there are certain events that might take the price of Alphabet stock high. The following are the factors that will take Alphabet’s stock high. Let’s check it out.
CEO's Bullish View On Blockchain
In a recent interview, Sundar Pichai said that he is super bullish about blockchain technology. He adds that the company is severe and might enter this space soon. Sundar Pichai explained, “On Web3, we are definitely looking at blockchain. Web3 is an interesting and powerful technology with broad applications.” Thus, if this happens, then surely the share prices of Alphabet Inc will go up.
Acquisition Of Mandiant
Recently, Alphabet Inc completed the purchase of the “Mandiant” company on March 2, 2022. The deal was signed at a whopping amount of $5.4 billion with $23 per share. In a recent annual report, Mandiant announced $483 million in revenue in 2021 with an increase of 21% year over year. Now, when both companies are coming together, there are chances that Mandiant will contribute a lot to Alphabet Inc.
Fund Raising In Sandbox AQ
“Sandbox AQ“, one of Alphabet’s formed companies has recently raised funding of nine figures from various investors. Basically, Sandbox AQ is a company that develops quantum AI solutions for financial firms, IT firms, etc. There are many projects that the company is working on and claims to be a big business in the future.
Alphabet has been a consistently good investment, even though it seems to have lowered in price every year since its IPO in 2004. The company is growing, consistently making a profit, and is a very large and diverse organization. We know it would be a difficult decision to select which stocks(GOOGL and GOOG). To make it simple, we have stated various pros and cons of investing in Alphabet stocks and is Alphabet stock a good buy or not. We have also answered your question, Is Alphabet Inc a good investment in 2022 or not. Though the stock price is increasing at a good pace, you will still get a share of a very large and successful company.
We hope this article was useful and informational to you. If you have any questions regarding Alphabet Inc, do comment down below.
Well, you get the advantage of some rights. Basically, in Class A shares, you get voting rights, whereas in Class C shares you don’t. Although there isn’t much difference in the price of both shares, it depends on you. Because, both shares are doing pretty good.
There are in total 247 subsidiaries of Alphabet, Google being the top one. The major subsidiaries of Alphabet include Google LLC, Waymo Holdings Inc, Verily, Calico, CapitalG. In 2022, two cybersecurity companies namely Siemplify and Mandiant were purchased.
It was Google that was established first. Likewise, the history says when Google was created in 1998, it was an independent company. Until in 2015, when Alphabet Inc was formed, the founders thought of naming it as parent company. Basically, the idea was to create such a company that will reduce the work load on Google and all the major operations thus could be handled by a parent company. Hence, Alphabet came into existence.