Rising antitrust regulatory threats against Alphabet (NASDAQ:GOOGL, GOOGL) weighed on the stock performance of the tech giant. After a rough start to 2022, the bullish case on GOOGL stock is untouched. The recent correction offers a compelling entry point for investors seeking exposure to the world’s leading digital advertising and online search platform.
Google’s market dominance is been scrutinized by regulators and the growing penalties are becoming noteworthy. In the past few years, Google’s total antitrust payments in Europe totaled more than 8 billion EUR, bringing headwinds on the tech giant and more broadly on tech stocks. Yet, the debate on dismantling tech giant monopolies has been going on for years, with no sustainable solution at the end of the day. While antitrust threats will continue to linger on GOOGL’s search engine and online advertising business, overall penalties in the last decade represented only 14% of 2021 earnings.
GOOGL’s bullish case remains untouched for the moment. Despite a massive market capitalization, the tech company has excellent financials. Revenues are expected to grow on average by 15% per year in the next three years. Net margins are estimated to stick around 25% per year. The tech giant had an enormous cash position of $124.8 billion at the end of 2021. GOOGL stock trades relatively low compared to its robust growth, posting a forward P/E of 24.1x.
The tech giant continues to beat market expectations. Alphabet topped fourth quarter 2021 analysts’ revenue and earnings per share (EPS) guidance for the sixth time in a row. Besides, the forthcoming 20-1 stock split makes another argument sustaining the bullish case of the company, as retail investors are more tempted to buy entire shares instead of fractions of a stock, lifting investor interest in Alphabet’s shares.
For now, antitrust regulatory penalties should be considered by investors as a fix-fee payment, representing a small portion of Alphabet’s earnings. This will not materially damage its long-term bullish thesis. The recent sluggishness of GOOGL stock looks unjustified. Therefore, this constitutes an opportunity for long-term investors seeking exposure to a tech champion with solid financials, steady growth, and relatively attractive valuation multiples.
On the date of publication, Cristian Docan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.