Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock closed out 2021 with a bang, surging over 60%.
Advertisers ramped up spending last year after a muted 2020. Its business has been firing on all cylinders, with revenue growth of over 41% on a year-over-year basis. Moreover, with its 20-for-1 stock split, GOOG stock will be priced more attractively than ever.
Alphabet has been a growth juggernaut with average revenue growth of over 20% in the past five years. Moreover, it has also registered double-digit growth in its EBITDA, making it one of the most profitable entities in the tech world.
With multiple tailwinds at its back, it will continue to post strong results across both lines for the foreseeable future. The pandemic-led digital transformation of businesses has played right in Alphabet’s and its peer’s hands to drive future expansion.
Incredible Operating Performance
Alphabet never ceases to amaze with its top-notch operating performances. In the nine months ended in September last year, revenues were up 44.4% from the prior-year period to $182 billion. The massive surge in sales is reflective of the return of advertiser demand.
Digital advertising accounted for roughly 64.4% of the total advertising market last year. The results represented a healthy 12.3% bump from 2019. Moreover, its incredible search business did so well last year that it effectively navigated Apple’s (NASDAQ:AAPL) testing privacy changes.
With the proliferation of online digital channels, advertisers have plenty of options to choose from. However, Google remains unmatched among search engines, with a market share of over 86.6%. Its position in the digital space is such that users use the term “googling” information instead of online searching. Google is arguably one of the most powerful brands, constituting over 58% of the company’s overall revenue in its most recent quarter.
Furthermore, Alphabet benefits immensely from its sticky ecosystem and scale advantages. The more consumers use its services, the more it learns from its data to leverage AI and become better over time.
During the fourth-quarter earnings call, Alphabet CEO Sunder Pichai talked about the importance of AI for the company. He states that AI will be critical in making Alphabet’s services more helpful this year. Moreover, he also shed light on how the company was investing heavily in AI capabilities to maximize the benefits of investments.
What the Stock-Split Means For Investors
Alphabet’s board recently green-lit a 20-for-1 stock split. That means GOOG stock will be trading at a significantly cheaper price. A stock split essentially increases the share count by dividing shares to a lower price. Existing shareholders will now own 19 more shares for every share they own.
According to the company CFO Ruth Porat, the split was implemented to make the shares more accessible. The goal is to make them more accessible to the retail investing crowd. Moreover, the move will also get GOOG stock into the Dow Jones Industrial Index. It will be part of a flagship index which will naturally result in index buying from investors.
Nevertheless, Alphabet’s long-term case remains intact and is unlikely to change much due to the stock split.
The Bottom Line on GOOG Stock
GOOG stock is everything an investor is looking for in a potential investment. Alphabet owns some of the most prolific businesses that dominate the digital realm.
Its fundamentals are rock-solid and offer immense long-term value for investors. Moreover, you can effectively own the stock for a remarkably cheap price, considering the positives. Owning GOOG stock is a no-brainer for 2022.
On the date of publication, Muslim Farooque 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.
