Google (GOOGL) recently divided its stock into two classes of shares namely Class A and Class C. Due to this, the S&P 500 has now 501 components technically but the total number of companies still remains 500. Google stock was recently down when the search engine giant announced its 1st quarter Earnings for FY14.
After the announcement Google stock price was down 3.15% in the aftermarket trading. Google had missed the Revenues and Earnings Expectations by $90 million and $0.15 respectively. Investors reacted to the news and the stock price came down to $543 from $563 in the next trading day. But does GOOGL really deserve this price drop? Is it fairly valued?
Many of the analysts believe that Google is a strong growth stock and given its position in the market, it’s better off than some of its competitors like Yahoo. There are certain growth drivers of Google that can lift its stock price up in the periods to follow. The Android operating system from Google leads the market share and the push to bring brand advertising dollars to search and display can be an important source of driving revenues in the future. Google stock is considered as a long term investment that will give investors more value given its plans to invest in other products and create new opportunities.
Google (GOOGL) stock price today as on 18th April 2014 was trading at $543.34 down 3.65% from previous day’s closing price of $563.9. Google shares have shed 3.14% of their value since the start of 2014. Analysts have given a consensus estimate of 23.5% growth of Google stock in the coming 12 months that shows their optimism on the company.
Before the stock split of Google occurred, its share price was $1135, but after the split of 2 for 1, stock price reached to $571.5. Since Google is expanding into cloud services, analysts expect it to further increase the company’s revenues. In the last five quarters, Google Revenues have increased consistently. One negative aspect in these five quarters in that their operating expenses have increased in every period.
Google stock has appreciated 38.7% in the last one year and 22.5% in the last six months. Google stock is given a buy rating by majority of the analysts and expect its stock price to appreciate 22.4% in the coming 12 months. Google Earnings per share in 4QFY13 were up 10% from the same quarter of FY12. Google Revenues have increased in value by 28% in 4QFY13 year over year (yoy).
Google stock news recently came in when its stock was down 3% in the aftermarket trading following the news of Earnings miss and Revenues. Google ad payments were 9% down which might have concerned investors. However The Revenues for GOOGL were 19% up year over year and consumers ad reviews increased by 26% from the year ago period. In the last one month, Google shares have shed 10% of their value amid a selloff in tech stocks and market realization of stocks overvaluation.
Google recently announced the acquisition of Titan Aerospace which is a relatively new company. It makes drones that are solar powered and fly on high altitude. Now how can Google benefit from a drone company? Google is looking to use these drones to deliver internet service. This division will work along with Google Maps and Project Loon.
Google has also invested in cars that don’t require a driver to operate, gadgets, robots for military and many more products. As we analyze the future of GOOGL, these acquisitions and making of new innovative products will help it enter new markets and attract new customers which will lead to high Revenues going forward. Google stock price is also expected to give high capital gains to the shareholders.