Investing in Google (Alphabet) Stock (GOOGL; GOOG)

What you need to know when investing in Alphabet

Alphabet Inc. (GOOGL; GOOG) is a holding company comprised of a collection of businesses, the largest of which is Google. Google operates a number of digital platforms and services, including its search engine, Chrome Internet browser, Android, Gmail, online data storage, YouTube streaming video, and other services. It also offers cloud computing services through Google Cloud, which allows developers to build, test, and deploy applications. Beyond its core businesses, Alphabet operates an Other Bets segment, which includes early-stage businesses that primarily generate revenue from internet, TV, licensing, and research and development services. It also has made large investments in the Stadia cloud gaming system and self-driving vehicles through Waymo.

Alphabet was originally founded as a search engine company in 1998 under the name Google Inc. Google went public through an initial public offering (IPO) in 2004, issuing shares of Class A common stock on the Nasdaq Global Select Market under the symbol "GOOG". The company then split its stock in 2014. That created a new set of Class C shares that began trading on the Nasdaq Global Select Market under the symbol "GOOG," while the company relabeled its Class A shares under the ticker "GOOGL". In 2015, the company reorganized and created the holding company named Alphabet Inc. Since its founding, Google has grown into the world's most popular search engine with an 87% share of the search market. It has also diversified far beyond its original search engine services.

Alphabet's headquarters are located in Mountain View, CA. Sundar Pichai is the current CEO, having taken over from co-founder Larry Page in 2019. The company is classified within the communication services sector. Alphabet competes with companies that provide online platforms for connecting people with information and relevant advertising, digital content and application platforms, enterprise cloud services, and more. Major competitors include Inc. (AMZN), Microsoft Corp. (MSFT), and Apple Inc. (AAPL).

Key Takeaways

  • Alphabet provides digital platforms and applications that connect people to information, news, advertising services, cloud services, and more.
  • Alphabet's rivals include Inc. (AMZN), Microsoft Corp. (MSFT), and Apple Inc. (AAPL).
  • Alphabet earned $40.3 billion in net income on $182.5 billion of revenue in FY 2020.
  • Google plans to ban ads from appearing next to content that denies climate change.

Alphabet’s Recent Developments

  • On April 13, 2022, Alphabet announced it would "invest approximately $9.5 billion in our U.S. offices and data centers in 2022."
  • On Feb. 1, Google announced in its Q4 FY2021 earnings press release that its board of directors has approved a 20-for-one stock split. The stock split will be effected in the form of a one-time special stock dividend on each share of the company's class A, class B, and class C stock. If the stock split is approved by shareholders, each stockholder of record as of the close of business on July 1, 2022 will receive a dividend of 19 additional shares after the close of business on July 15, 2022.
  • On Oct. 7, 2021, The Wall Street Journal reported that Google plans to ban digital ads from appearing next to content denying climate change on its platform and also on its YouTube video service. The ban covers content that denies climate change is caused by human activity or by carbon emissions.
  • On Sept. 10, 2021, Reuters reported that the global semiconductor shortage forced Google and India's Reliance Industries (RELIANCE.NS) to delay the launch of a low-cost smartphone that the two companies have been jointly developing. Reliance Industries has said the smartphone would be the most affordable phone in the market both globally and in India, which is the phone's initial target market and the world's second most-populous nation.

What's Happening with the Antitrust Suits Against Google?

On Sept. 27, 2021, Google began its appeal of a 2018 decision made by the European Union (EU) to impose a $5 billion antitrust fine on the company. EU regulators argued that Google had illegally abused the market power of its Android operating system for mobile devices.

On Sept. 18, 2021, a report by India's antitrust authorities based on a two-year investigation into Google found that the company abused the dominant position of its Android operating system, according to CNBC. The report was completed by the Competition Commission of India in June and was recently made public by Reuters. Google argued that its practices have not been anticompetitive and submitted at least 24 responses during the probe. The report is another setback for Google in India, where it is facing several investigations in the company's role in the payments app and smart TV markets.

On Sept. 14, 2021, Google was fined $176.7 million by South Korea's antitrust regulator for blocking local smartphone makers from creating customised versions of the Android operating system. The fine follows an earlier setback during the month that Google experienced in South Korea when the country's parliament passed a bill allowing software developers to use their own payment systems and collect their own commissions on apps within Google's and other major companies' respective app stores.

On Sept. 9, 2021, the MLex news service reported that the EU is starting a new antitrust probe into Google over whether Google’s voice assistant is installed as the default in cars, smart TVs, phones and other devices. The EU also is looking at whether Google has sought to prevent manufacturers from installing rival voice assistants.

Google also faces an antitrust lawsuit brought by the U.S. Department of Justice (DOJ) in October 2020. The DOJ alleged that the company uses anticompetitive practices to maintain a monopoly for its search engine and related ad business. Google allegedly pays mobile-phone manufacturers, carriers, and browser providers to keep Google as the preset, default search engine.

What's Happening with Google's Cookie Policy?

On June 24, 2021, Google announced the latest developments for its Privacy Sandbox initiative. The initiative aims to create digital technologies capable of protecting online privacy while also giving companies and developers tools to build web businesses that are universally accessible. The initiative involves Google's browser, Chrome, and aims to phase out support for third-party cookies by late 2023. Cookies are used to identify individual users and can be used to track their online activity. Google still will keep tracking users' data in many areas. But as a result of the initiative, the Chrome browser will no longer allow cookies that collect individual users' data for the purpose of selling targeted web ads. This change is likely to have significant implications for the digital ad industry but will have less impact on Google itself.

What's Happening with the Google Play Store?

On Aug. 31, 2021, the South Korean National Assembly passed a bill that would force companies to allow consumers to pay for in-app purchases using third-party payment systems. Google takes a 15% service fee from every in-app transaction from apps on its Google Play Store, rising to 30% after the first $1 million that an app’s developer earns.

On Aug. 11, 2021, a bill was proposed in the U.S. Senate that could place restrictions on Google's Android operating systems related to how its app store operates and the kind of rules it imposes on developers.

On July 7, 2021, 36 states and the District of Columbia filed an antitrust lawsuit against Google, alleging that the company's app store illegally abuses its dominance. Specifically, the lawsuit alleges that Google uses contracts, technical barriers, and other means to maintain a monopoly over the distribution of apps on mobile devices that use the Android operating system.

What's Happening with Google and Newspapers?

On July 13, 2021, Google was fined 500 million euros ($590 million) by the French Competition Authority for failing to comply with an April 2020 ruling. The ruling states that Google would have to pay publishers and news companies for using their copyrighted material on its sites and negotiate payments for it “in good faith.” The authority stated that, “Google’s negotiations with publishers and press agencies cannot be regarded as having been conducted in good faith.”

On March 10, 2021, U.S. lawmakers introduced a bill in Congress to address what they see as an imbalance of power between news organizations and major technology companies. If the legislation is passed, it would allow news outlets a four-year exemption from antitrust laws in order to collectively negotiate compensation from online platforms, like Google, to use their content. The rise of digital platforms has severely impacted the local newspaper industry. Between 2004 and 2019, approximately 2,100 newspapers stopped publishing and another 60 have closed since the start of the pandemic.


Has GOOGL ever split its stock?

Google has split its stock once:

  • March 27, 2014: shares of Class C capital stock were distributed as a dividend to holders of Class A common stock and Class B common stock, (owned by company insiders), enacting the stock split.

Google announced on Feb. 1, 2022 that it will conduct another stock split:

  • July 15, 2022: the 20-for-one stock split, if approved by shareholders, will be effected in the form of a special stock dividend whereby shareholders will receive 19 additional shares for each share of the company's class A, class B, and class C stock they hold as of the close of business on July 1, 2022.

Does GOOGL pay a dividend?

No it does not pay a dividend.

How many shares of GOOGL stock are there?

Alphabet has three classes of common stock:

  • As of July 20, 2021, Alphabet's class A common stock (GOOGL) had 301,084,627 of shares outstanding.
  • As of July 20, 2021, Alphabet's class B common stock had 45,501,786 of shares outstanding. These shares are neither listed on an official exchange nor are they traded.
  • As of July 20, 2021, Alphabet's class C common stock (GOOG) had 320,168,491 of shares outstanding.

Who is Google's CEO?

Sundar Pichai took over as CEO of Alphabet from co-founder Larry Page in December 2019. Prior to that, Pichai was CEO of Google, a role he had held since August 2015 when Google was reorganized as a subsidiary of Alphabet. He joined the company in 2004 as the head of product management and development. During his tenure with Google, Pichai also was vice president of product development, senior vice president, and product chief of Google and the Android smartphone operating system.

Who is Google's Top Shareholder?

The biggest individual shareholder of Alphabet's class A common stock is K. Ram Shriram, one of the company's independent directors. As of Oct. 8, 2021, Shriram owns 64,112 shares of GOOGL, representing about 0.01% of all outstanding shares.

The biggest institutional shareholder of Alphabet's class A common stock is Vanguard Group Inc., which owns 22.8 million shares, representing 7.6% of total GOOGL shares outstanding, according to the company's 13F filing for the period ending June 30, 2021.

The biggest individual shareholder of Alphabet's class C common stock is Larry Page, company co-founder and director. As of Oct. 8, 2021, Page owns 19.8 million shares of GOOG, representing about 3% of all outstanding shares.

The biggest institutional shareholder of Alphabet's class C common stock is Vanguard Group, which owns 21.3 million shares, representing 6.6% of total GOOG shares outstanding, according to the company's 13F filing for the period ending June 30, 2021.

Article Sources
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