Why I invested 28000$ in GOOGLE stock

In this video, I explain why I invested 28000$ in google stock. I cover the following points:

Hello mrs let’s talk about google today as always i like to start with my position first just so you can have some context and secondly just so you know the entire video is going to be biased so here you can see my exact position i’ve invested around 28 000 and unfortunately i’m down by 20 if you watch this video till the end i’ll also tell you what i plan to do

With this position because i plan to make some serious changes within my portfolio now whenever you see big companies like microsoft or google for example and they become the top holdings of a portfolio it always makes you wonder why not go with small caps that can easily grow by 25 or 30 surely a company like google can’t give you 20 returns every year right but

What if i told you that’s actually possible let’s see what analysts think about this company and for this we’ll actually use alpha spread so let’s just search for google here and we’ll go into wall street estimates section first you can see what our analysts thinking about this company so you can see the lowest forecast for the next 12 months is actually positive

And of course the highest forecast here is 77 now on this channel we like to dig deeper so let’s try and understand why are these analysts so optimistic about this company on the same alpha spread page if you just scroll down below you also see a revenue forecast now do keep in mind during the last 12 months the revenue has literally surged by 41 yet despite that

Analysts are still optimistic about this company now i should mention at the end of the day these are only alice estimates so please take this with a pitch of salt as a matter of fact if instead of 13 revenue growth rate they mentioned 15 i still wouldn’t question that fact so we just need to understand is this even possible because at the end of the day google is

Not a small company anymore and when the company is so big especially after 41 revenue growth rate well the law of large numbers it goes against you you can’t grow by 20 every year now as you might have guessed there are always some exceptions many times companies do get bigger and they use the cash flows they have to buy the future growth rate one nice example here

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Would be microsoft so if you take a look at their revenue growth rate you can see it actually accelerated at a very fast pace and that’s one of the reasons why microsoft remains my biggest holding as a matter of fact if you like to know more about microsoft you can simply click over here by the way as we talk about big companies i’ll tell you what’s not big either

Definitely didn’t sound right but what i meant was my channel is not so big so if you like to help me out here please click the like button down below now coming back to our original question is it possible that google can actually maintain the double digit growth rate for that we need to understand the business model and we’ll focus on the advertising business

The search advertising business as that’s the lion’s share of the business now when it comes to search google has 91 market share the second biggest player here is bing bing has between three or four percent market share the problem is i can’t say second biggest player because three percent is not big so let’s just say the closest competitor has three percent

Market share fun fact did you know the more search term on bing is actually google why i’m not surprised now unfortunately when it comes to search google already has 91 market share i say unfortunately because it’s very hard to grow from 91 what can you make your market share 93 that’s not gonna help you anymore you’re a large cap so how do you maintain that double

Digit growth rate well one option here is to increase the traffic so if more people search online this google or youtube for example then google will make a lot of money the problem is when it comes to developed markets like the us or euro for example google has nearly tapped every household so once again this is not a viable option now yes in emerging markets like

India for example google can easily grow at 15 or 20 the problem is the average revenue per user in emerging markets is extremely low i’m sure you might be thinking wait a second this guy just invested 28 000 in google and he still can’t explain why will google actually maintain that double duty growth rate when it comes to revenue well here is the answer you see

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Google doesn’t need to increase the market share it doesn’t need more traffic what it needs is more inventory so let me explain what i mean by inventory and i’ll use facebook here as an example five or six years ago facebook didn’t have marketplace wheels or we didn’t have stories either these formats simply weren’t there fast power today all these businesses are

Still growing by double digits so facebook created new formats where creators like you or me we can actually post there so they created more inventory so they can place more ads as you might have guessed google is trying to do the same thing but unfortunately it’s not as successful as facebook so in the case of google i’ll give you one example google finance they

Launched this in 2020. you can actually track all your stocks i use this daily and you can add it international stocks as well you get all the news conference calls and everything you want to know about your company i come to all these features they are all for free there are sites out there actually charging you 10 to 15 google does everything for free why is that

Because let’s imagine you’re actually tracking intel for example in google finance you read some news well guess what google can actually show you two ads to banner ads and bam that’s a profitable business so both these companies facebook and google they’re just creating more inventory now yes they launch some features which will suck so if you take facebook for

Example they launched facebook dating who the hell is using it i have no idea but at the same time they also launched facebook marketplace and that has more than one billion users as a matter of fact i’d say for facebook that’s a very profitable business because if you’re searching for let’s say a nissan car for example you actually search for that and they’ll

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Show you ads of nissan cars so you can see that’s very targeted ads and facebook created new inventory just out of the blue if i’m being honest with you when it comes to google i’m not worried about revenue growth because even in the last quarter the search engine managed to grow by double digits but we didn’t talk about youtube google cloud and there are many

Growth drivers out there for example youtube premium that’s a very high margin business for them and nobody talks about it the main metric i like to track here is the operating income because if you take the previous period let’s take between 2017 and 2020 for example you realize google wasn’t an efficient player as you can see over here the operating margins kept

Decreasing literally every year it was frustrating because the core business was so profitable yet google for some reason kept overspending they had the other bets category and they kept losing money so it wasn’t an efficient player but for some reason now which is actually a good thing google finally realized that and they are becoming more efficient and we can

See that in alice projections as well so if you use alpha spread again you just scroll down below you can see operating income and they’re expecting a 15 growth rate now i personally think this number is actually conservative google can easily hit a 20 growth rate when it comes to operating income if you like to use alpha spread you can simply use the link in the

Description below now as i promised let’s take a look at my position so i’ve invested around 28 000 but i think i’m being the conservative here so i might make this thirty five thousand forty thousand dollars it might even become the biggest position here because as i mentioned i think the operating income can easily grow by twenty percent and if we include share

Repurchases here i think the stock is going to do really well now please keep in mind google is just one of my portfolio holdings if you like to know more about my other holdings you can simply click over here

Transcribed from video
Why I invested 28000$ in GOOGLE stock🚀 By Stockado