For those of you who didn’t invest, say, $1,000 in Google’s initial public offering (IPO) back on August 19, 2004, wanna hear something really depressing?
Yeah, you do.
Google’s IPO was priced at $85 a share on that historic day. At Google’s (Alphabet’s) current price of $906.66 (close on 8/21/17), that $1,000 investment in Google — assuming you got the IPO price — would be worth $21,333.18 today.
And that’s just for 11 shares. Imagine if you had owned 120 shares at the time? Or 500?
Google has realized a gain of 1,780%.
Man. (If you’re anything like me, a litany of if-onlys run rampant through my head…)
Quick history lesson
Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), formerly known as Google, sold 19,605,052 shares on August 19, 2004, then exactly a year later, on August 18, 2005, sold another 14,25,265 shares.
As of June 2005, Google was valued at about $52 billion, and the second sale of Google shares on August 18, 2005 doubled Google’s cash stockpile to $7 billion.
Last year, Alphabet’s sales and net income were over $90.2 billion and $19.4 billion, respectively, compared to sales and net income at $968.1 million and $105.6 million in 2003.
Google’s controversial stock split in 2014 (prior to Facebook’s IPO announcement) transpired because the company wanted to create a new class of non-voting shares.
In the two-for-one split, shareholders received an additional non-voting share for every share of Google stock owned.
Google’s announcement was timed strategically largely because of Facebook’s IPO; it was a way for Google to assure investors of their reign in the world of tech stocks. “Don’t forget about me, guys, I’m still a big fish,” Google seemed to say.
Recent history: Alpha-what?
“Over time, our emerging high-usage products will likely generate significant new revenue streams for Google as well as for our partners, just as search does today.” –Larry Page
Larry Page’s dreams are elephantine; that’s why he upcycled Google into today’s lesser-known (by the general population, anyway) Alphabet, Inc. A better explanation actually exists right on abc.xyz. In a detailed note from Larry Page to visitors to the abc.xyz site, he thoughtfully describes how Google has evolved and describes in delightful, colorful brevity how Google began its new life as a company controlled by its holding company, Alphabet.
The nitty-gritty is simple: Officially on October 2, 2015, Google restructured its business, taking its “side projects” (think driverless cars, glucose-sensing contact lenses, and longevity/anti-aging products–among hundreds of other ventures) and plopped them into companies separate from Google.
Alphabet is the parent company of the smaller companies. To see how they are set up, there are lots of interesting charts online, but this really is an easy way to break it down and see exactly what the names of the smaller companies are:
ALPHABET (parent company of the following):
- GV (formerly Google Ventures)
- Nest Labs
- Sidewalk Labs
- Google Fiber
Here’s a handy list of Alphabet’s business units and links:
Calico: A biotech research and development with the task of studying human lifespans and contributing to anti-aging.
GV: Alphabet’s venture capital unit.
CapitalG: A growth equity fund, CapitalG invests in companies around the world which are harnessing technologies in unique ways and thinking far into the future.
Verily: Alphabet’s research organization dedicated to the study of life sciences.
Waymo: An autonomous (self-driving) car development company.
Nest Labs: A home automation company.
X: A specialized research and development department tasked with tackling the most challenging problems in computer science and related fields.
Sidewalk Labs: An Alphabet company that designs and builds urban innovations to help cities meet their many challenges.
Fiber: High-speed broadband internet.
Google, of course, is still alive and well, it’s just a trimmer version of its former self. It’s still the Big Papa of the following:
And what about right now?
So, history lessons notwithstanding, how can Alphabet apply to you and me today, right now?
(By the way, if you’re wondering if Alphabet will split again so you can jump onto more palatable stock prices, think again. Alphabet has shown no signs of another split on the horizon.)
Should I buy GOOGL right this minute?
This summer, Alphabet stock hit an all-time high and rose more than 30 percent over the past year.
It’s pricey. At stock prices hovering around $900+, it’s tough for most small investors to even entertain the idea of owning a slice of GOOGL pie.
However, with its far-reaching investments, from broadband cable to life sciences to driverless cars, Alphabet has its hands on everything in so many different sectors.
With those vast opportunities, as well as a leadership team that dreams absolutely gigantic dreams, Google is still one of the best stocks to own—if you can stomach the price.