Google Stock: Is It a Buy, Hold or Sell Right Now?
Revenue at the world’s most popular search engine is up, even despite the coronavirus pandemic. It grew by 19% in 2020 and by 34% in the first quarter, compared to last year. The stock is on a serious streak as well, leaving investors to guess where the ceiling is.
A Market-Beating Stock — but for How Much Longer?
Alphabet’s stock (NASDAQ: GOOG) has seen a 45% lift since the end of last year, in comparison to 13% for the S&P 500. Its voting-class counterpart, GOOGL, has seen a bigger surge — 68% — so far this year. Is the stock tapped out?
Google (GOOG, GOOGL) currently goes for more than $2,000 per share, but one analysis gives it the potential to reach $5,000 per share by 2025. The company’s revenue from YouTube has grown by 49% in the first quarter, compared to the corresponding quarter in 2020 — and there are a number of additional business arms at Google, from cloud to search and mor.
Google is no stranger to gargantuan growth; the stock has surged almost 3,000% since its 2004 debut. The question is whether Google’s current business goals and obstacles will be able to support further growth or whether a contraction could potentially be on the horizon.
The Road Ahead for Google
A few aspects of Google’s work are currently making headlines and keeping watchful eyes watching.
The Start of a Retail Presence
Google recently opened its first brick-and-mortar store in New York’s Chelsea neighborhood. Although hardware sales and support aren’t the company’s bread and butter–digital ad revenue is estimated to be 80% or more of the company’s revenue–, the new store reflects a growing commitment to retail. Google has previously offered pop-up shops, but this step forward will place the company in front of its customers and prospects in a bigger, more tangible way.
Concerns Over Emerging Privacy Work
Google is working on its privacy sandbox — an initiative aimed at enhancing privacy on the web. As part of that, the company wants to dismantle third-party cookies, which are historically the best way for advertisers to track and profile a user online. Google intends to roll out a product called FLoC, which stands for Federated Learning of Cohorts. Users will be assigned to cohorts based on their profile, which can include everything from demographics like age and location to online behavior.
Although Google’s effort taps into existing sentiment in the industry about the need to replace third-party cookies with a solution better suited to safeguarding user privacy, there’s uncertainty about what that should look like. FLoC aims to group users by their online behavior and assign each group a label. Not everyone is on board, and some speculate that grouping and labeling users could be difficult and potentially dangerous.
Google’s Latest Product Offerings
In the last month, Google made its collaboration tool, Workspace–formerly called G Suite–, available to everyone. It also introduced new features such as a companion mode for Google Meet, new RSVP options and enhanced moderation capabilities.
The company has also said that it’s working on new methods of classifying skin tones in an effort to make products, such as wearable sensors and facial recognition systems, less biased and more inclusive.
Regulatory Issues — Domestic and International
Domestically, Google is facing an antitrust investigation led by Texas Attorney General Ken Paxton. The company also under scrutiny in Europe, where it has faced a multitude of fines for various violations.
Dissatisfaction With Remote Work Policies
Google is preparing, along with most employers, to bring its workforce back to campus — with mixed results so far. Some employees report that they were told their positions were moving to North Carolina, with a pay cut to boot, only to see the company retract that later. In the meantime, the company has been trying for at least a partial return to the office despite some objections from employees who’d prefer to continue working remotely. One executive, however, got the green light to work from New Zealand, which did not sit well with everyone.
Growing Culture Problems
Above and beyond the return to office life, some of Google’s top leaders recently shared their concerns via an article in the New York Times. Fifteen executives, some currently employed at Google and some formerly, spoke to the newspaper about growing bureaucracy at Google, fears of innovation going by the wayside and an unhealthy focus on public perception.
Good To Know
- There are two types of publicly available Google stock – Class A shares (GOOGL), which come with voting rights, and Class C shares (GOOG), which do not. Offering both types of shares allows Google to be a public company but retain its agency.
- If you’re interested in investing in Google’s stock but find its price point cost-prohibitive, you can look into buying fractional shares. Increasingly, financial institutions will allow you to take whatever money you have — say $25 — and purchase a fraction of a stock share.
- You can also find Google stock in diversified investments, such as index funds and exchange-traded funds that track the overall stock market.
Is Google Stock a Buy, Sell or Hold?
According to Zacks, Google is currently a hold. However, CNN Business deems it a buy based on a poll of multiple investment analysts, and a Nasdaq analysis estimates that there is still time to experience upside. Overall, the stock appears to be a green light, or a worthwhile investment right now.
A Company Under Close Watch — Now and Always
Google has been a staple in our digital lives for a long time now, with no end in sight. As such, it’s a company that’s likely to fall under close observation and scrutiny. Investors who are interested in Google stock should be prepared for the ups and downs that are likely to result from such scrutiny and should ideally be resolved to take the long view.
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