He looked to the titans for a pathway forward. He followed in their footsteps, and in the process paved his own investing strategy. eToro Popular Investor Nestor Armstrong calls Warren Buffett, Benjamin Graham, Charlie Munger, and Peter Lynch his mentors. Like them, Armstrong looks to successfully build a portfolio that will outperform the S&P 500. We are in the midst of the third-quarter earnings season and we asked Nestor for some insights into one of the major players in the market: Google.
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Can you give us an overview of the company?
$GOOGL is most commonly known as the most recognisable search engine in the world. However, the company also provides advertising services in America, Africa, Asia and Europe. It also operates through services such as Google Cloud, Chrome, Google Maps, Google Play and YouTube.
Since its inception in 1998, the term “google it” has become part of common culture as well as a place to find whatever the human (and not so human) mind can think of.
Sundar Pichai is the current CEO of Google and of the Alphabet company (holder company for the Google family). Pichai joined Google in 2004, where he has led innovation with a suite of software products such as Google Chrome, Chrome OS, Gmail, Google Maps, and is largely responsible for Google Drive. In 2015, he was appointed CEO and has held this role ever since.
What are Google’s sources of revenue?
85% of Google’s revenue comes from advertising, with the remainder of its profits coming from sales on apps and content such as YouTube and Google Play, sales from its Chromebooks, Pixel smartphones, Nest and Google Home. Businesses wishing to show and sell their products to potential clients are conscious that Google is one of their largest venues where consumers seek and browse for such products. Google sells ads to these companies for them to appear in searches and queries.
Google currently enjoys solid operating (29.65%) and net (25.89%) margins, in part due to its sheer dominance as the search engine of choice for most users.
How does Google measure with ESG standards?
In regards to ESG (Environmental, Social, Governance), Google has been carbon neutral since 2007, and is also committed to net zero carbon emissions (carbon free) in its global operations by 2030. The company supports comprehensive climate and clean energy policies and wants to be a part of the ecological restoration of the planet.
What were the highlights of Google’s Q3 report?
– Revenue: $69.09 billion vs. $70.58 billion expected
– Earnings per share (EPS): $1.06 vs. $1.25 expected
– YouTube advertising revenue: $7.07 billion vs $7.42 billion expected
– Google Cloud revenue: $6.9 billion vs. $6.69 billion expected
– Advertising revenue (85% of Google’s Revenue) increased 2.54% to $54.48 billion
What is your outlook for the future of Google?
Google is a behemoth of a company, but its revenue stream is quite simple. At the end of the day, advertising is Google’s core business. As stated before, the future is digital, and businesses know that if they are not advertised on e$GOOGL, they might as well not exist at all.
As long as Google continues to dominate the search engine market and dish out a decent profit, it should be a staple in the portfolio. Although Google stock is down more than 30% YTD, its long- term trend is upward/bullish, with a +518% stock price increase over the past decade. Google has also outperformed the market by 232% over the past 10 years as well.
Nestor Antonio Armstrong Rodriguez is a Champion Popular Investor on eToro with more than 8 years of investing experience.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
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