Google Stock has been below 50-Day Moving Average for a week, and a lot of investors may be struggling whether to buy $Goog or $Googl stock at this price level. So today I would like to talk about some bears and bulls opinions about Google stock and my own thoughts.
Google has been the largest advertising company in terms of revenue, and has been the leading position in search business, Android system and other online software services. Recently some bear opinions has caught my attention, as I saw Former Facebook executive Chamath Palihapitiya tweet about his bearish opinion about big tech giants like Facebook and Google. Below are a sum up of the bearish opinions.
Bears:
1. The rising of competitor products. Some investors think that new products like TikTok may bring threats to Google as well, as people spend more time on these new platforms and their time in total are limited, thye would spend less time on the older platforms like Google’s Youtube.
2. Regulations & Antitrust
A lot of new regulations have come out to these tech giants since 2017, as these tech companies seems to have too much data and power to influence people’s lives. For example, Google’s acquisition of Fitbit has been in process for a while because the regulations are evaluating the deal to avoid potential anti-trust issue.
3. Tax
Big tax on those big companies can cut their profitability. As the current stock price reflects the future free cash flow of a company, more tax can mean stagnation of stock price.
However, for an Internet company whose revenue heavily based on advertising, I think the key indicator is whether they can still attract those advertisers’ money continuously in the future. For advertisers, their logic is to spend the advertising dollars at the place that has traffic, and they always want certainty in their advertisement campaign (like CTR, conversion rate). So that leads to the bull opinions about the company.
Bulls:
1. Continuous growth of user base and traffic will continue to attract those advertisers who are looking for certain marketing results. With the comprehensive tools like Google Analytics and Google Adwords, the data and value provided to advertisers could not compete by the new platforms.
2. As for the new regulations, it may temporarily cause Google to pay a fine in case of the breach of some. On the other hand, it can also bring threats to Google’s competitors. In that case, when smaller players cannot survive in the tense regulations, it may be good news to Google.
3. in The origin search business nowadays just one of but not the whole of Google. Other than the G-suite ecosystem like Gmail, Google Maps, Google Drive, as well as Android system and Google Chrome browser, who also become monopoly in those areas and occupy more than 50% of the market share. Google has been investing in more projects, especially AI area. Those competitive can help Google continue its growth despite of new competitions or regulations.
In a word, I think Google is one of the growth stocks in the next 5 years, with its monopoly in several categories, huge user base and number of data it has. I personally will buy the dip of Google stock like today at $1,487 and hold it for 5 years based on the current company assessment. As I think in the internet business, data and ecosystem a company built have been the most important properties.
Source
CNBC Chamath Palihapitiya: Here’s why you go short big tech stocks Facebook and Alphabet right now
Twitter https://twitter.com/chamath/status/1281630456807452677?s=20
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