There are only a handful of companies that have as dominant a hold over their market as Google does. The search engine accounts for 90% of internet searches in Europe and 91% in Asia. The Google share price performance since the firm listed in 2004 reflects the power and influence the firm has over the internet and the path of least resistance for the share price still appears to be upwards. Hard facts support this theory and since the COVID-led share price crash of March 2020, Alphabet Inc (Google’s parent company) shares have more than doubled in value.
The beauty of the Google operation is that the customer-facing interface has a pleasing aesthetic and allows users to navigate the web without feeling overwhelmed by adverts. At the same time, Google’s iron grip on the internet search market allows it to generate incredible revenue streams from firms desperate to use Google to reach potential consumers.
The firm’s willingness to flex its muscles extends to its corporate structure. It has set itself up with three types of shares, each with their own characteristics, so investors need to be aware of the quirks involved. This review will break down such issues and provide a step-by-step guide on how to buy Google shares online.
Google Shares: The Basics
While Google is the trade name of the firm, the shares you actually need to buy to tap into this success story are in the parent company Alphabet Inc, which is headquartered in Mountview, California, USA.
Things then get a little bit more complicated because Alphabet Inc is listed on the Nasdaq Exchange under two different tickers:
- GOOGL – Known as Class A shares, or Google Common Stock. These give you a share in ownership of Alphabet Inc and voting rights on a one-share-one-vote basis.
- GOOG – Known as Class C shares. These give you a share in ownership of Alphabet Inc but have no voting rights. As they have less influence over the management of the company, they typically trade at a discount to Class A / GOOGL shares.
- Class B shares – There is also a third type of share, which is unlisted. Held by the founders, Larry Page and Sergey Brin, they have 10 votes per share.
This setup is somewhat controversial as it dilutes the voting rights of mainstream investors. The founders have greater control over the firm than in a standard corporate setup, but that allows them to manage the ‘direction’ of the firm.
For many investors, this structuring is a price worth paying and putting faith in the guys who came up with the successful idea in the first place makes sense. For others, there’s a sense of unease that the fifth largest firm in the world is, in some ways, being run like a tech start-up.
Stock splits are a common practice used by successful firms whose share price has performed so well that they become too expensive for some smaller investors to buy. Stock-splits follow simple supply and demand principles – the number of shares increases, but as the actual day-to-day business of the firm hasn’t changed, the value of the firm remains the same. As a result, each individual share has a lower list price and is more accessible to smaller investors.
Recent and Historical Market Performance
The Google share price has been one of the 21st century’s stock market success stories. It first listed at $85 and has increased in price by 26-fold. Tech stock firms have historically been more volatile than the broader market and there are still risks involved with investing in Google. The largest recent price crash in GOOG shares was in March 2020, when the firm lost more than 34% of its value in the space of six weeks.
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Background to the Google Stock Splits
The GOOGL shares that were listed in 2004 underwent a stock split in 2014, when holders of GOOGL received 2,002 new shares for every 1,000 existing. The new shares were the Class C (non-voting) variety, so the firm managed to keep the market capitalisation the same but reduce the share price by approximately half.
A second smaller scale split took place in 2015 when investors were credited with 10,027,455 new shares for every 10,000,000 shares they previously owned.
Stock Split Technical Note 1:
- The share price history charts provided by brokers factor these splits in. This is so clients get a clearer visual representation of how the Google share price has performed.
Is it a Good Time to Buy Google Shares?
The Google stock splits are important because they unsettle some investors and this can cause pricing anomalies. With the GOOGL share price currently $2,283, there are rumours swirling in the market that there may be another split on the way.
This is because an ‘average Joe’ with the not insubstantial amount of $1,500 to invest will currently have to look elsewhere unless he can find another $783. Artificial restrictions on demand are bad for Google share price performance and good for rivals such as Facebook ($308 per share), Netflix ($543) and Microsoft ($258).
If a stock split were to be announced, the market may look on it favourably and expectations of future buying pressure would drive the Google share price higher.
Stock Split Technical Note 2:
- Some brokers, such as eToro allow clients to buy part of a share. In the above example, eToro would let the average Joe use his $1,500 to buy 0.65 of a GOOGL or GOOG shares.
As a result of its size, Google is a popular stock for investors. There is a lot of information that is freely available, meaning you can minimise the risk of getting caught out by news from an obscure source. Another advantage for investors in Google is that the market is also very liquid, which keeps pricing efficient and means you won’t get ‘stuck’ in a position.
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- IG follows the analyst ratings of 41 different brokers and the consensus advice is ‘Strong Buy’ or ‘Buy’.
- The Google stock rallied strongly on the back of 2020 Q4 data, which showed internet search advertising and YouTube advertising revenue beat analyst estimates.
- The cloud computing division, which has so far been a net loss maker, could be about to start adding to the bottom line. Google management has stated margins are predicted to improve.
- The firm is sitting on a significant cash pile and it’s authorised to buy $15.4bn more of its own stock in a long running buy-back program. Risks to Google’s future prospects are largely related to the threat of tougher regulation from governments around the world. While this can’t be denied, the lack of a concerted approach from different nations points to this risk being a slow burner.
Steps to Buy Google Shares
It’s possible to invest in Google from almost any country in the world, even if you’re not a US citizen. Online brokers have revolutionised the investment industry and now provide a trustworthy, cost effective and user-friendly trading experience. If you want to buy Google shares from the UK, it’s simply a case of choosing the right broker and following some easy steps. This can be done using a desktop or a mobile device.
1. Choose a Broker
There are hundreds of online brokers to choose from, but this review of trusted brokers is a handy shortlist of firms that are experienced and regulated. They all have multi-year track records and offer their own take on providing clients with what they think is important.
Buying Google shares at our chosen broker is an incredibly straightforward process. The platforms on offer have been designed with beginners in mind but also offer easy to use research and analysis tools to help you develop your trading skills. One quick win is to devote some time trying out free demo accounts with a few different brokers. These are risk-free ways to practice trading using virtual funds and allow you to, at the same time, try out different platforms.
*68% of retail CFD accounts lose money
2. Open & Fund an Account
You need little more than an email address to set up a demo account. Opening a live trading account requires you to share a greater amount of personal information and upload some documentation to verify your identity. This is so that brokers can comply with Know Your Client (KYC) rules set out by the regulators is a sign you’re registering with a trustworthy broker.
Most brokers offer a variety of ways to pay funds into your new brokerage account, including bank transfer and debit or credit card. If you’re in a hurry to buy Google shares, it’s worth noting the processing times differ for each of the payment methods.
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3. Open an order ticket and set your position size
As soon as funds are credited to your online account, you are ready to trade. Locating the different right market can be done using the ‘stock search; function, which will take you to the trading dashboard for that stock, but do note that some brokers interchange use of the terms ‘Google’ and ‘Alphabet Inc’ shares.
The trading dashboard is the heart of the buying process, where you’ll also find price charts and news reports on the stock. Opening an order ticket and getting ready to buy Alphabet shares involves simply entering the number of shares you want to trade.
One feature to look out for is ‘All Sessions’ shares. Some brokers, IG included, offer markets in Alphabet shares on a 24/5 basis. While the Nasdaq exchange is officially open only during market hours, the broker provides a non-stop market in the stock. This helps minimise ‘Gapping Risk’, which occurs when news events provide an out-of-hours price shock. This would normally not be reflected in price until the exchange opened on the morning of the next trading session.
4. Set your stops and limits
Stop Loss and Take Profit orders can be put on your positions before or after you click the ‘Buy’ button. These risk-management instructions instruct the system to automatically sell some or all of your positions if price reaches a certain level. If price moves against you, Stop Losses will come into play. If it goes in your favour, Take Profits orders will crystalise some of your gains. This means you can manage your account on a 24/5 basis but without having to watch the price all the time.
5. Select & Buy Google Shares
Once you’re happy that every box has been ticked, all it takes to trade Google shares is a click on your mouse or a tap of the screen.
There are two common-sense but important tips from experienced traders to keep in mind.
- Before you click ‘Buy’ or ‘Sell’ Google shares– Check if you are buying the shares outright or in Contracts for Difference (CFD) form.
CFDs offer greater flexibility as you can use leverage and scale up the risk-return on the trade or short sell. They do, though, incur overnight financing fees. If you’re looking to buy Google shares and hold them for more than a few weeks, then it will be more cost-effective to buy Google outright. This article explores that subject in greater detail.
- After you trade– Be sure to check the trade details. ‘Fat finger’ errors such as buying the class of share are best corrected before the Alphabet share price moves too far.
Fees When Buying Google Shares
The boom in online trading and investing has resulted in fierce competition between brokers and drastically lower trading costs.
The below chart details trade execution costs at trusted brokers. These firms make the majority of their revenue on the difference between the buy and sell prices they offer their clients – the bid-offer spread. This means separate ‘commissions’ are largely done away with.
| eToro | Plus 500 | Markets.com | AvaTrade | IG | |
| Live Account Fee | No charge | No charge | No charge | No charge | No charge |
| Demo Account Fee | No charge | No charge | No charge | No charge | No charge |
| Bid Offer Spread – Google shares | 3.15 | 17.37 | 6.33 | 29.82 | 4.66 |
| Cash Deposit Fee | No charge | No charge | No charge | No charge | No charge |
| Cash Withdrawal Fee | Yes – $5 per transaction | No charge | No charge | No charge | No charge |
| Inactivity Fee | Yes – $10 per month after 12 months inactivity | Yes – $10 per month after 3 months inactivity | Yes – $10 per month after 3 months inactivity | Yes – $50 per quarter after 3 months inactivity | Yes – £12 per month after 24 months inactivity |
| FX Conversion Fee | Offers accounts in USD, only | Offers accounts in USD, GBP and EUR | Offers accounts in 14 base currencies incl. USD, GBP, EUR | Offers accounts in USD, GBP, EUR, CHF | Offers accounts in 6 base currencies, including USD, GBP and EUR |
| Minimum Deposit | $200 (or equivalent) | $100 (or equivalent) | $250 (or equivalent) | $100 (or equivalent) | $250 (or equivalent) |
There are other charges to factor into your cost-benefit analysis. These include account inactivity fees, which in reality are more about platforms ensuring dormant accounts don’t build up in size. At Plus 500, for example, you can avoid the charge simply by logging on to demonstrate you are an active user.
Full Overview of Google
Niche and History
The foundation of Google set out the blueprint that many innovative tech-start-ups would follow. Larry Page and Sergey Brin met in 1995 when Brin gave Page a tour of the Stamford University campus. The story goes that they had a series of strong disagreements at that first meeting. Yet, by the following year, they were working on a research project that would end up shaping the world.
They still hold about 14% of the company’s value and 56% of the voting rights and have overseen Google’s rapid expansion and growth into one of the world’s dominant brands.
Financial Overview
Charts of the firm’s balance sheet history show the firm progressing in the right direction.
Source: IG
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- Google EBITDA Margin– $54.9bn
- Google Earnings Per Share (EPS) – 62.55
- Gross Margin – 53.58%
- Google P/E ratio– 37.54 The five-year average P/E ratio for the Nasdaq 100 index is currently 37.55.
- Google Share Dividends– Google does not pay dividends but it does use spare cash to buy back shares, which creates additional upwards pressure on the share price and results in capital gains for investors.
When all the different share classes are added up, Alphabet Inc is found to currently have a market capitalisation of $1.5tn. It’s one of the largest firms in the world with a proven and profitable business model but still has the excitement associated with tech growth stocks.
Google Ethical Rating
Google does an effective job of ensuring its relationship with its end users is one based on trust and reliability. It also ranks very highly as an employer. A lot of its competitive advantage is based on behind-the-scenes operations that target big organisations and ‘the little guy’ is largely excused from those spats.
Google’s approach does lead to it drawing fire from governments and corporate advertisers. While this poses a genuine risk, the firm has, to date, managed to navigate a course that doesn’t severely impact its reputation or profitability.
Environmental Impact
The computer mainframes that Google uses are energy-intensive. The firm has therefore done well to manage the risk of user dissatisfaction with its approach and states it has eliminated its entire carbon footprint, investing in quality offsets. The firm claims it became carbon-neutral in 2007, compensating for all of the carbon the firm has ever created.
Treatment of Workers and Local Communities
Google consistently ranks highly in employer charts. Its on-payroll staff are supplemented by teams of remote-working consultants who provide expertise in certain fields. These staff are also protected by the firm’s policies. In April 2019, Google announced that vendor and staffing partners working with Google in the US would be “required to provide a new benchmark of benefits for their workers” (source: Google).
This includes:
- $15 per hour minimum wage
- 12 weeks of paid family leave
- Eight days of paid sick leave
- $5000 year in tuition reimbursement
- Comprehensive healthcare
Source: Google
Ethical Initiatives
With branding being such an important part of the Google offering, its unsurprising that the firm has invested considerably in a range of welfare initiatives. It has dedicated teams that focus on advancing the firm’s policies on sustainability, digital wellbeing, human rights, crisis response, unwanted software and diversity and inclusion.
Controversies
Google’s dominance of the internet search market has left it open to criticism. While the end-user experience is largely unhindered by disputes between the firm and its rivals, there is a risk that the losers in the situation combine forces to challenge the tech behemoth.
National governments are perplexed by the firm’s ability to operate in their jurisdictions, but pay little tax. At the same time, big corporations are left feeling they enter into any negotiations with a losing hand. Greater regulation could be on the cards, but whether that will hinder Google is another question.
The European Union has already taken steps to clamp down on big tech firms, but Google still holds 93% of that region’s internet search market. At the same time, the more tech-friendly US government reports that only 88% of the internet search market is taken up by the firm there.
Summary
Google has found success by following a simple set of principles and it is yet to face any kind of serious competition. This is reflected in the soaring share price. While some have held off and have wondered, ‘is now a good time to buy google shares’? The price has continued upwards.
The different share classes are a concern for some, but as the founders keep making the right calls and generating more profits, others are happy to put their trust in them. However, investors do need to make sure they are buying what they intend to.
Potential future stock-splits and the ongoing share buy-back program are background reasons to consider investing in Google now. The firm’s domination of the all-important search engine market is a more direct reason to consider adding the firm to your portfolio now.
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