Introduction
Google is the most popular search engine and one of the world’s most visited websites. Though Google started as a web search engine, the company has evolved into a global tech giant with numerous products and services. It is also a major player in the financial markets.
The shares of its parent company, Alphabet Inc., are traded as ‘GOOGL’ on major stock exchanges. In this article, we will explain how you can invest in Google stocks.
Highlights and Key Takeaways
- Google is one of the largest companies in the world today. Its parent company is Alphabet Inc., with shares traded as GOOGL and GOOG on Investing.com and NASDAQ.
- You can invest in Google shares by opening a brokerage account and placing an order on the trading platform.
- You can also buy ETFs or index funds that track the performance of Google stocks. These options come with lower risks, taxes, and fees.
- After investing in Google stock, you need to monitor your portfolio by following the company’s news, reading stock market news, checking daily stock price movements, etc.
Understanding Google as an Investment
Google LLC is one of the subsidiaries of the company Alphabet Inc., whose shares are traded as GOOGL and GOOG. The difference between GOOGL and GOOG is that the former is a class A stock that gives shareholders voting rights. Conversely, GOOG is a class C stock that does not confer voting rights to shareholders.
Note that there are also Class B shares. These stocks are only for the company’s founders and are not publicly traded.
Why Invest in Google?
Growth Potential
Economic moat is a term used to describe the ability of a business to outshine or outperform its competitors. Experts believe that Google has built a deep moat around its enterprise. The company’s expansion to other areas will also strengthen its market share. So, investing in Google is a safe investment.
Economic Moat
Economic moat is a term used to describe the ability of a business to entrench superiority over its competitors. Experts believe that Google has built a deep moat around its business and is even expanding to other areas. So, investing in Google is a safe investment.
Impressive Share History
Google released its IPO on August 19, 2004. The share price was $85, which increased its market cap to $23 billion. Today, the firm’s market cap is about $1.79 trillion. Shareholders have gained from 2 stock splits:
- 2 for each share in April 2014
- 20 for each share in July 2022.
Google stocks have experienced rapid growth and performed well since its IPO. For example, if you invested $1,000 on the IPO day and bought 11.76 shares, your investment would have doubled to 23.52 in 2014. In 2022, it would have become 470.4 shares. Today, at approximately $136 per share, the $1,000 investment would be worth $63,974.40.
Revenue profile
The chart below shows Google’s annual revenue for the last 21 years.
In 2022, the company reportedly had a revenue of $282.8 billion. According to Fortune, Alphabet ranked 8th on the list of the 500 largest companies in the world by revenue in 2023.Since it is one of the largest firms in the world, it is improbable that investing in Google will lead to losses.
Risks Associated With Investing in Google
Every investment comes with specific risks and Google is no exception. Here are a few risks associated with Google stocks:
Lawsuits
In January 2023, the US Dept of Justice (DOJ) and 8 states filed an Antitrust lawsuit against Alphabet over its monopoly of digital advertisement. The parties accused Google of neutralizing competition through acquisitions, which led to its high advert fees that stifled small businesses.
If Google loses this case, it will pay fines and restructure its advertising processes. The news of a lawsuit loss can also impact the company’s revenue since Google Ads is its primary source of income. For context, Google generated $224.47 billion from ad revenue in 2022. A fall in income can negatively impact Google’s stock.
Emergence of Artificial Intelligence (AI)
With the launch of ChatGPT and other AI technologies, Google’s business model is under threat. If AI takes over internet search, Google’s business, income, and stocks will likely plummet.
Growing Competition
Since 2014, Google and Facebook have dominated the digital advertising space. But in 2022, their total market share dropped to below 50%. During this period, Amazon, TikTok, and Netflix recorded increments in their revenues.
How To Buy Google Stock
Choosing a brokerage
Brokerages are financial firms that serve as intermediaries between stock exchanges and investors. They buy or sell stocks on behalf of their clients for a fee. Online brokerages or stockbrokers are mostly discount brokers who offer affordable trading services without investment advice.
Below are some factors to consider before choosing a brokerage:
Define Your Investment Needs
Determine your investment goals such as short-term profits, steady income, long-term growth, etc. Define your risk appetite and risk tolerance. Will you be an active trader or a passive investor? Your answers will help determine the type of stockbroker that you need.
Check the Broker’s Reputation
Ensure you consider only licensed and regulated brokerages in your state or country. Check their reputation and existing user reviews online to also have a feel of what using them is like. Doing so will help narrow down your options to the best stockbrokers.
Fees and Commissions
Brokerages charge trading and non-trading fees. Some brokerages charge annual maintenance fees, withdrawal fees, inactivity fees, etc. Understand the fee structure of the option you’re considering. Also, compare fees charged by other brokerages to avoid paying higher fees than necessary.
Understand the Account Types
Determining your exact needs and the right account type you need is crucial. For example, a margin account allows you to borrow funds from your broker to buy stocks. But, you will pay the money back with interest. Discretionary accounts empower the brokerage to make investment decisions on your behalf.
Assess the Trading Platform
A trading platform is a software application that connects a trader with the brokerage. It is usually a desktop, web, or mobile app for placing orders online. You must check out a brokerage’s trading app or platform to assess its features, order types, charting package, and trading tools before choosing it.
Customer Support
Always check a brokerage’s client support to know if they are accessible and willing to assist when the need arises.
Placing a Stock Order
An order is an instruction to your brokerage to buy or sell a security on your behalf. Usually, traders place stock orders over the phone or on the broker’s trading platform. However, a trading platform offers more transparency, flexibility, and multiple order types.
Follow the steps below to place your order:
- Open a brokerage account, verify your identity, and fund the account.
- Log into the trading platform and find GOOGL stock.
- Click on ‘new order’.
- Set your trade parameters, such as the number of shares to buy, order type, stop loss, etc.
- Click ‘Place order’ to complete the transaction.
Monitoring Your Investment
Understanding Stock Performance
Keeping track of your investment can help you make timely decisions that align with your investment goals. Various apps can help you monitor your stock performance, but you can also do it yourself using the tips below.
Follow the Market News
Ensure you stay updated with the latest news, information, and financial statements from Google. Also, follow stock market news because external factors besides the company’s performance determine stock prices.
Keep Track of Financial Statements
Always analyze the quarterly financial statements released by Google.
Monitor the stock prices
Monitoring the daily charts with fundamental and technical stock analysis is good. However, avoid emotions and make decisions based on the stock price movement and market realities.
When To Sell Your Stock
Google stocks do not pay dividends. So, the only revenue option for investors is to sell at some point. Below are some factors to consider before selling your Google stock:
Investment Objectives
You can sell your stock if the share price has reached your target price for profits.
Stock Outlook or Fundamentals
If the analysis of the stock predicts lower long-term prices, you can sell to reduce risks.
News
If the news from the company signals bad times ahead, it will affect its stock prices. At this point, you may sell.
How To Invest in Google with Funds
A cost-effective, tax-efficient, and less risky way of investing in Google is through Index Funds and ETFs. Index Funds are securities that track the performance of an underlying security. Google stocks are part of many indices, including the S&P 500 and NASDAQ 100.
Exchange Traded Funds (ETFs) are a basket of securities grouped and traded like stocks on an exchange. Google stocks are parts of hundreds of ETFs. For instance, over 400 ETFs carry GOOGL shares.
You can trade index funds and ETFs from your brokerage account like you do actual stocks.
Conclusion
Google is one of the biggest names on the internet today. Under its parent name, Alphabet Inc., it has diversified into many other businesses besides internet technologies. If you are wondering how to buy Google stock, follow the steps below:
- Open an online brokerage account.
- Place an order on the brokerage’s trading platform.
- Monitor your investment.
You can also invest in index funds or ETFs holding Google stocks to manage risks.
FAQs
How Can I Buy Google Stock?
You can buy Google stock from any reputable online stock brokerage. Just open an account, fund it, log into the broker’s platform, and place your order.
Should I Buy Google Stock?
Yes, Google stocks are good investments because of the company’s revenue profile, growth potential, and market dominance. However, there are no guarantees that you’ll profit from investing in Google.
Does Google Pay Dividends?
No, Google doesn’t pay dividends to its shareholders.
Should You Invest in GOOG or GOOGL?
GOOG is a ‘class C’ share that offers you equity in the company without voting rights. GOOGL is a ‘class A’ share that gives shareholders voting rights. If you need voting rights, choose GOOGL. If not, invest in GOOG.
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