Google

I added to my position in Alphabet Inc A (GOOGL) on 4/3/2020 at $1090.895. Alphabet is still our 8th largest position at this time.

The resumed downward pressure once again makes for a good opportunity to add more or initiate a position. If it stays or goes down more I most likely add more.

Not much new to say that I haven’t mentioned in previous posts accept that it appears that interest in paid search still remains strong. eMarketer recently reported that when polled, most advertisers claimed that paid search was the most likely channel to be retaining budget or receiving new money, though only 24% of respondents said they were keeping money in search compared with 47% who said they were pulling it from display, for example. About two-thirds of respondents thought performance media would get more of a focus in the coming months.

Here is my previous analysis: Alphabet Inc A (GOOGL) – Buy

I added to my position in Alphabet Inc A (GOOGL) today at $1065.9456. Alphabet is now our 8th largest position at this time.

Better known as Google, I first bought Alphabet back in 2007 at a split adjust price of $230.44. I’ve wanted to get more over the years, but either missed the opportunity or felt the valuation wasn’t right. Finally, the price is at a level I’m comfortable with. I love to buy into companies where I spend a lot and ones that I feel are crucial to my life and/or business. Alphabet/Google is one of those. The problem has been too many others felt the same way and therefore were willing to buy at any price. However, now people are panic selling and selling everything even companies that stand to benefit from the current environment. It’s very irrational.

Alphabet is becoming a Berkshire Hathaway of sorts of the modern world in it’s collection of wholly-owned companies where it has a core competency in that also produce huge amounts of cash, which it then can invest in pieces of other great businesses.

It’s no secret that Alphabet does depend a lot on ad revenue that it derives from from it’s Google search business, Youtube and Adsense partners.

Here are just some of the Google products/ services that I use and depend on:

• Google Voice
• Google Ads
• Google Adsense
• Youtube
• Android
• Google Analytics
• Google Search Console
• Google PageSpeed Tools
• Google Alerts
• Google Drive
• Gmail
• Google reCAPTCHA
• Google Shopping
• Chrome Browser
• Google Business Listings
• Google Trends
• Google News
• Chromebook (hardware)

Other businesses that they are invested in through their CapitalG and CV divisions that I use/ depend on are:

• AirBnb
• Stripe
• Cloudflare
• Robinhood

They also own Nest, Waymo, Calico, DeepMind, Verily, Google Fiber and are invested in Uber, Lyft, CrowdStrike, Zscaler, DocuSign, Slack, 23andMe and much more. It’s really impressive just how much they are involved in and it’s even more impressive is the success of many of their investments.

Google Ads is my largest expense overall in my life. I have depended on Google Ads since it’s inception for the largest portion of our retail sales on the our own retail sites and it’s the primary promotion method we use for the majority of our marketing clients. I believe that even with a downturn in the economy, marketing budgets will be cut more elsewhere and proven marketing channels where you can better track conversions like Google Ads will be kept. Youtube is considered to be the 2nd most popular social media platform the last time I checked and should continue to be more popular in the “stay at home” economy producing more ad revenue as well as revenue share from paid media channels.

Over time, their other businesses and other investments should help diversify their revenue streams more and reduce their dependence on Google Ads revenue.

The valuation has finally come down to a level I’m comfortable with. The PEG is 1.21. Still a bit higher than I like, but under the 1.50 threshold I look for. Having watched the company for years I don’t believe the opportunity to get it at a much lower price is likely. If it continues to go down I will most likely add more.