Google has become synonymous with an internet search. When we search for something online, we say we're "Googling it."
As a portal you likely use frequently (you might have even found this article through Google), you may be wondering how to invest in Google stock. Here's a step-by-step guide on investing in Google stock and some factors to consider before investing in the technology stock.
Is Google publicly traded?
Is Google publicly traded?
Google has been a publicly traded company since 2004. However, it no longer trades under that name. As the company grew beyond its namesake search engine, it changed its name. In 2015, Google formed a holding company called Alphabet (GOOG -0.03%)(GOOGL -0.09%).
The new name fits with its evolution into a collection of companies. In addition to Google, brands underneath the Alphabet umbrella include YouTube, Android, Chrome, Fitbit, Nest, Pixel, and many others (including its Bard artificial intelligence chatbot and Waymo autonomous driving unit).
Google Bard
Will Google IPO?
Will Google IPO?
Alphabet seems unlikely to break up its various platforms and complete an initial public offering (IPO) of its Google search engine. However, the company might consider a spinoff or IPO of its venture capital-backed Waymo unit in the future.
Why does Google have 2 tickers?
Why does Google (Alphabet) have two tickers?
Google's parent company, Alphabet, trades on the Nasdaq stock exchange. It has three share classes and two stock tickers:
- Class A shares (GOOGL): The class A shares carry one vote per share.
- Class B shares (non-traded): Each class B share has 10 votes. Google's co-founders own these shares, giving them more voting power.
- Class C shares (GOOG): The class C shares have no voting power.
Given their voting power, class A shares (GOOGL) tend to trade at a slightly higher price than class C stock (GOOG). Investors need to determine if having a vote is worth paying the slightly higher cost to invest in the company.
Stock split history
Google stock split history
Google and its parent company, Alphabet, have completed two stock splits in its history. Google implemented a 2-for-1 split in 2004, giving each class A holder a class C share. The second split came in 2022 when Alphabet conducted a 20-for-1 split.
How to invest
How to invest in Google
Although you can't invest directly in Google's search engine, you can invest in its parent company, Alphabet. You can buy shares of Alphabet in any brokerage account. If you still need to open one, these are some of the best-rated brokers and trading platforms. Here's a step-by-step guide to buying Alphabet stock using the five-star-rated platform Fidelity.
Fidelity makes it easy to buy stocks. Its website offers a video tutorial and a step-by-step guide. Here's a screenshot of how to place a stock trade with Fidelity:
On this page, fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The ticker symbol (GOOG or GOOGL for Alphabet).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Market Order
Once you complete the order page, click the "Place Order" button at the bottom and become an Alphabet shareholder.
Alternative ways to invest
Alternative ways to invest in Alphabet stock
Instead of actively buying shares of Alphabet directly, you can passively invest in the technology company through a fund holding its shares.
Alphabet is one of the largest companies by market capitalization and a widely held stock. Alphabet is in several stock market indexes, including the Nasdaq Composite and S&P 500 index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Alphabet stock.
According to ETF.com, 277 ETFs owned 418.6 million shares of Alphabet as of mid-2023. The Invesco QQQ Trust (NYSEMKT:QQQ) held the most shares at 61.1 million. The fund had a 3.9% portfolio weighting to the Class A shares and a 3.8% weighting to the Class C shares. That gave it a 7.7% total portfolio weighting to Alphabet, making it the fund's third-largest holding and giving investors solid exposure to Alphabet stock.
Should you invest?
Should you invest in Google?
Before investing in Google's parent company stock, you need to determine if Alphabet shares are a worthwhile investment. Here are some factors to consider before investing in Alphabet stock:
Is it profitable?
Is Alphabet profitable?
Alphabet is a wildly profitable company. The technology titan produced almost $60 billion of net income in fiscal year 2022. On the one hand, that was down from $76 billion in fiscal year 2021 due to a lower operating margin and a huge swing in other income from a $12 billion profit in 2021 to a $3.5 billion loss in 2022. However, while reported profits were down, Alphabet's cash flow from operating activities was just about flat year over year at $91.5 billion.
The company is taking steps to reverse its profit decline. In early 2023, Alphabet announced plans to cut jobs and other costs. The moves could save it billions of dollars, boosting its bottom line.
Revenue
Alphabet's revenue
Alphabet generated $282.8 billion of revenue in fiscal year 2022, 10% more than in fiscal year 2021. Google search remains the company's biggest revenue contributor. The company's search engine generated $42.6 billion of revenue in the year's final quarter, 56% of Alphabet's $76 billion in total revenue for the period.
Valuation
Alphabet's valuation
Alphabet's valuation has declined over the past year:
That put the valuation of Google's parent company around the average of the major stock market indexes. As of mid-2023, the S&P 500 traded at 19.8 times its forward price-to-earnings (P/E) ratio, while the Nasdaq Composite traded at 28.7 times its forward P/E ratio.
Does it pay a dividend?
Does Alphabet pay a dividend?
As of mid-2023, Google's parent company, Alphabet, did not pay dividends. Although it's very profitable and generates significant free cash flow, the technology titan uses that money to expand the business and repurchase shares.
The bottom line
The bottom line on investing in Google
Google remains the dominant name in internet search. However, the company has grown beyond search over the years, leading it to change its corporate name to Alphabet. The company is highly profitable. Shares of Google's parent could make a good long-term investment, especially if it can restart its profit growth engine.
