The Trillion Dollar Club: Trading Alphabet’s Shares

January 27, 2022
by Leon Marshall,

Article Recap

Although Google and its parent company Alphabet have had a rough climb to the trillion-dollar mark, with almost double the value in a year’s time, GOOGL is now close to entering the $2 trillion field. However, ongoing lawsuits may prove that quarterly profits are, in fact, ill-gotten gains, a part of which may have been made in collusion with Facebook.

Alphabet’s history

Before Alphabet, there was Google. The parent company is a California-based conglomerate that came to the market in 2015 after a restructuring, but the humble beginnings of the world’s most used search engine, which is much more nowadays, were just the same as almost any other startup in the 90’s. Throughout Google’s history, we have seen it rise and expand into numerous industries, including but not limited to artificial intelligence, autonomous cars, biotechnology, cloud computing, software and hardware, health care and robotics, and more. 

At the time of establishment, Alphabet was owned by Google Inc. Тhe roles reversed with the goal of making Google “cleaner and more accountable and better” while improving on “the transparency and oversight of what we’re doing”, as stated by Larry Page, one of the co-founders of Google. Functioning as a collection of companies, Alphabet was co-founded by Larry Page and Sergey Brin, but since they stepped down from their CEO positions in 2019, key people within the conglomerate have taken up their roles –John L. Hennessy as Chairman and Sundar Pichai as CEO.


GOOG(L) hits $1 trillion – chases the $2 trillion mark

On January 16, 2020, Alphabet became worth $1 trillion for the first time. At the time, Apple and Microsoft were already having coffee at The Trillion Dollar Club, and they welcomed the newcomer with a $400 billion and $300 billion lead accordingly. Amazon, on the other hand, had clocked out and was back to the $900 billion mark. Shares surged butthe triumph lasted only a while. Less than a month later, on February 5, 2020, GOOGL sank 3%, dragging the company’s evaluation out of The Club. Shortly after, the value jumped back up and sank again at the end of February. 

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Ever since, Alphabet’s performance has been improving across the board. As a member of FAANG, GOOGL has been carefully approaching SAM, or the three companies that have a market capitalization of over $2 trillion – Saudi Aramco (ARMCO, Apple (APPL), and Microsoft (MSFT). In fact, on November 8, 2021, GOOG briefly hit a market cap of $2 trillion, closing out at $2,987.03 per share, though it dropped back to $1.9 trillion just before the day ended.

Over the past year, Alphabet has nearly doubled its value, and third quarter results report an increase of 41% year over year, while profits have increased nearly 69%. Contributing factors for the 3rd quarter’s growth, as explained by Philipp Schindler, chief business officer, that there was “strong growth in local shopping queries”, in addition to physical stores reopening. In addition to that, Ruth Porat, chief financial officer, says that this growth is a mixture of constant consumer interest and long-term “broadbased” ad spending.

Google has had to face many challenges in the past months, which put under question its steady growth. The search giant is currently facing antitrust lawsuits in favor of its profits being ill-made. Тhe latest one is for its colluding with Facebook to manipulate ad sales after unredacted documents from an ongoing lawsuit were made public. 

Given the thin ice that Google is walking on, it will be interesting to see how the last quarter of 2021 and the first quarter of 2022 unfold. Even though there is a slim chance the company will suffer greatly from the ongoing lawsuits, there is still the possibility of a serious fall in shares value, depending on the outcome.

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