Google Stock: Is It a Buy, Hold or Sell Right Now?
Revenue at the world’s most popular search engine is up, despite, or perhaps even as a result of, the coronavirus pandemic. It grew by 19% in 2020 and by 41% 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 67.17% lift since the beginning of the year, in comparison to 24.21% for the S&P 500. Its voting-class counterpart, GOOGL, has seen a similar surge of 66.85% so far this year. Is the stock tapped out?
Google (GOOG, GOOGL) currently goes for nearly $3,000 per share, but analysts’ average price target is $3,272.22 and the high target is $3,500, suggesting the stock has plenty of room to grow. The company’s ad revenue from YouTube grew 43% in the third quarter, compared to the corresponding quarter in 2020 — and there are a number of additional business arms at Google, from cloud to search and more.
Google is no stranger to gargantuan growth; the stock has surged roughly 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 makes up the bulk of the company’s revenue — the new store reflects a growing commitment to retail. The investment seems to be paying off, and not just with product sales. Philipp Schindler, Google’s chief business officer, said during the Q3 earnings call that retail was the biggest contributor to year-over-year ad growth, CNBC reported.
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 planned to dismantle third-party cookies, which are historically the best way for advertisers to track and profile a user online.
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.
During the Q3 earnings call, Ruth Porat, finance chief at Alphabet, reiterated the company’s commitment to privacy, saying that “focusing on privacy has been core to what we’ve been doing consistently,” CNBC reported.
Google’s Latest Product Offerings
In the last several months, 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, enhanced moderation capabilities and a Work Safer Program to protect Workspace against cyberthreats.
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.
In October, Google announced a plan to create a more “shoppable” experience for users who watch YouTube on their TVs. Expanded video action campaigns will make it easier for advertisers to reach consumers and give them the means to measure conversions.
Regulatory Issues — Domestic and International
Domestically, Google is facing an antitrust investigation led by Texas Attorney General Ken Paxton. The company is also under scrutiny in Europe, where it has faced a multitude of fines for various violations.
Google is also concerned about the possibility of new antitrust legislation. The company launched a website warning its customers that proposed regulations in Congress “would have unintended consequences for your business and could disrupt many of the digital tools you rely on every day.”
Dissatisfaction With Remote Work Policies
Google, along with most employers, is preparing to bring its workforce back to campus — with mixed results so far. After some false starts, the company has set Jan. 10, 2022, as the return-to-office date, but in response to employee objections about previous policy announcements, will allow offices in various locations to determine when employees should return based on local conditions. The new policy also requires that employees get 30 days’ notice. On-site employees must be vaccinated, The New York Times reported.
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?
Zacks notes that Google results have been favorable to earnings consensus estimates for the past four quarters. Five out of five analysts on Yahoo Finance rate the stock a “buy” or “strong buy,” and a Nasdaq analysis based on 15 analysts, including J.P. Morgan, Oppenheimer and Morgan Stanley, rate the stock a “strong buy.” 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.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of Oct. 28, 2021, and subject to change.
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- Zacks. 2021. "Alphabet Inc. (GOOG) Soars to 52-Week High, Time to Cash Out?"
- The New York Times. 2021. "Google delays its return to office until January."