Most likely it’s a combination of additional competition from AMZN and new players and faster growth by FB (26% growth). GOOGL also is unable to gain traction in Cloud Services with AMZN and MSFT dominating.
Problem analyzing results is that Alphabet does not provide details about YouTube and other parts of the business and also Other Bets Waymo etc are still not magnetizable and generating revenue. There is also a question of whether FB has better business model than GOOGL.
Overall GOOGL still has potential in Cloud Services and YouTube (Video Ads) and online advertising is only 40% of global advertising so there is still growth runway. Risks include fines for monopoly behavior and regulations and possibility of security breaches etc.
GOOGL trades now at $1190 which $160 per share excess cash and $50 EPS in 2019. That implies 20 times multiple or 5% adjusted earnings yield for a leading tech company with optionality in Other Bets and still growth to come.
MritikCapital Fair Value for GOOGL is $1250 and recommended buy under pride is $1000 or below. Last traded at $978 on 24 Dec 2018.
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