Google is a multinational technology company that provides various internet-related services - ranging from its famous Google search engine to cloud computing, software, and hardware services. Google LLC still exists as a company but is a fully owned subsidiary of Alphabet Inc. which was founded in 2015.
Alphabet is listed on the NASDAQ, but kept its ticker "GOOG" for Class C shares and "GOOGL" for Class A shares, but more of that later.
In this guide, we will explore how to trade the price movements in the share price of Google in either direction and get a better understanding of the GOOG stock.
Google is probably one of the companies that do not need much of an introduction. Google.com has over a billion active monthly users, and the word "Google" or "googling" is even commonly used as a verb to describe the act of searching for something on the internet.
Aside from running the world's most popular search engine, Google is also famous for its free email service Gmail, the file storage service Google Drive, video sharing platform YouTube, Google Maps, and various other products. It is easy to see what influence Google has just through those three popular and widely used services.
Google was founded in 1998 by Larry Page and Sergey Brin. Page and Brin both stepped down from their roles as CEO and President respectively but remain major shareholders.
Google went public in 2004 and was trading as Google Inc. until the reorganisation in 2015. Alphabet Inc. was created as a holding company, becoming the parent company of Google. The purpose of this was to give other group companies that are not involved in Internet services (Google's core business) greater autonomy.
While Google is the most famous subsidiary of Alphabet, there are a few more notable companies:
Currently, Sundar Pichai is both CEO of Google and Alphabet. In Q3 of 2021, Alphabet had 150,000 employees. Its headquarters is located in the famous Googleplex building in Mountain View, California.
Most of the revenue comes from advertising, but revenues generated from Cloud services are rising rapidly. As of June 2021, Google Ads Services made up over 90% of revenues, while the rest was generated by Google Cloud and other services.
Google's revenue took a hit in the early stage of the pandemic, caused by a slowdown in advertising. However, its ads business bounced back quickly and the revenue has soared since then. Increased online activity by consumers - another by-effect caused by the pandemic - has benefited Google.
The first step would be to pick the right broker. Ideally, a regulated, reputable broker that offers commission-free trading. The money saved from commission-free trading can add up quite quickly if a trader trades actively.
Depending on the type of trader, the online trading platform can also be an important factor. Day traders who often use technical analysis might require an advanced platform with sophisticated charting tools. On the other hand, long-term investors could feel comfortable managing their portfolio simply from the broker's mobile app.
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After choosing a broker, the next is to decide the budget and how much will be spent on the GOOG shares. Trading share CFDs gives you the ability to use margin. This means traders only need to put up a small percentage of the full value of a trade in order to open the position.
Before investing money into any stock it's wise to do some research into the company's financials, future outlook, and current performance.
Start by conducting a fundamental analysis and review of the company's financial statements, business model, corporate governance, competitors, and more.
Make sure to also consider technical analysis when reviewing the stock. To a beginner trader, these concepts may be new. The links mentioned above and our free share CFDs trading course will be a good source to learn the basics and get a better understanding.
There are two direct ways of buying GOOG shares:
Some long-term investors choose to make use of both options - holding physical shares as a long-term investment and making use of the underlying CFD to profit from a short-term decline in the share price.
Another way to trade Google is through index trading. One such index is the NASDAQ 100, where Google is a major constituent. The NASDAQ 100 is generally available as a Cash CFD or a Futures CFD. Cash CFDs have lower spreads and are more suitable for short-term traders, while Futures CFDs are popular amongst position traders as no swap fees will be charged.
Cash CFDs have lower spreads and are more suitable for short-term traders, while Futures CFDs are popular amongst position traders as no daily swap fees are charged.
Futures CFDs are subject to a rollover. A rollover is when a trader moves their position from the front-month contract (close to the expiration date) to another contract date in the future, to avoid the costs or obligations associated with the settlement of the contracts. Contract rollovers are profit neutral.
Buying Google shares directly is not the only way to invest in the tech giant. Many investors might already own Google shares without being aware of it. Google is a major constituent of the NASDAQ index, and as such, many popular ETFs also have exposure to it.
Some popular ETFs that include Google shares in their holdings are:
Major mutual funds with notable exposure to Google are:
For example, Google shares make up 1.59% of holdings of the VTI ETF which is one of the largest and most popular ETFs worldwide with almost $300 billion USD under management. The ETF has delivered an annualized return of 16.29% over a 10-year period.
Google went public in 2004 and started trading at $85 per share for a valuation of $23 billion.
GOOG closed at a price of $2,893 on December 31st, 2021. As of writing this article (January 18th, 2022) the Google stock price is $2,795.73 (GOOG) and $2,789.61 (GOOGL).
The all-time high stands at $3,037 and GOOG has been trading within a $1,721-$3,037 range during the past 52 weeks.
Alphabet (Google) currently has a market cap of $1.87 trillion, which makes it the 3rd biggest U.S. company by market capitalisation, just behind Apple and Microsoft. Google's market cap increased rapidly in the past few years.
It stood at only $364 billion at the beginning of 2015 and at $985 billion at the beginning of 2020, as COVID-19 started to spread. Google's market cap dropped below $800 in the March 2020 crash but quickly recovered and has been rising rapidly since then.
There are 317 million outstanding GOOG shares. 0.03% of shares are held by insiders, while 66% are held by institutions. As of December 2021, the number of shares shorted stood at 1.52 million, which represents 0.23% of the shares outstanding.
At the same time, there are 300 million outstanding GOOGL shares out of which 0.15 % are held by insiders and 80% by institutions. As of December 2021, the number of shares shorted stood at 2.03 million, which represents 0.31% of the shares outstanding.
We can tell by the numbers above, the interest to short Google shares (i.e. bet on falling share prices) is comparably low.
GOOGL shares are also known as "Class A" shares. Those are common shares that give investors an ownership stake and voting rights.
GOOG shares are the "Class C" shares of Alphabet. They give shareholders an ownership stake in the company but do not come with any voting rights.
While an IPO comes with a lot of benefits for the company, it can be tricky for founders/insiders as they could potentially lose more and more control of the company over time. Splitting shares into different classes is one way for founders to maintain their voting power in the company.
If we look at the price of Alphabet Class A and Class C shares, we will see only a minor difference.
Shouldn't investors value shares with voting rights be priced higher? In Alphabet's case, founders Page and Brin control more than 50% of Alphabet's voting rights and easily outvote investors anyway.
Alphabet is one of the major tech companies that is not paying out any dividends to investors. Given the meteoric rise of its share price, investors don't really seem to mind either.
Will the company ever pay a dividend? It certainly has the ability to do so as Alphabet is sitting on a lot of money and has very little debt.
GOOG is listed on the NASDAQ exchange and the regular trading hours are 9:30 AM to 4 PM.
Investors have the ability to trade in the pre-Market (4:00-9:30 AM Eastern Time) and the after-hours market (4:00-8:00 PM Eastern Time).
However, as participation from market makers is voluntary, liquidity could be lower than usual during these sessions. The price action might also be more erratic.
It could be a bumpy ride ahead for investors as they are facing rising inflation and the prospect of the Fed accelerating its monetary policy tightening. Tech stocks could face additional pressure due to concerns about high valuations.
However, Alphabet appears more reasonably priced compared to some of its peers in the tech sector. Furthermore, the company is sitting on a pile of cash that could help it diversify its business and reduce its dependence on traditional services. It is particularly the Google Cloud service that has large potential, despite currently making up only a small part of Google's revenue stream.
What are the charts showing?
Let's have a look at the weekly chart first. GOOG remains in a strong uptrend and the RSI is not hinting at overbought conditions as of now.
However, in the short term, there are reasons for concern for GOOG bulls as the stock has been struggling to maintain momentum. The support area between $2625-2662 is crucial, and bulls will have to defend it if they wish to keep the upper hand. A break below $2625 might signal the beginning of a deeper correction.
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The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
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