Revised Google Stock Price Forecast by Financial Analyst
Breaking Google up? Analyst Gil Luria thinks it could be a game-changer for Alphabet's shareholders, and here's why:
In a nutshell, Luria argues that by breaking up Google, the company's various sectors could reach their true potential—and that includes a bigger bang for the shareholders.
Imagine Alphabet as a split family: Search, Cloud, TPU, Deepmind, YouTube, Network, and Waymo. Google Search would presumably be the biggest player, valued at just over $1 trillion. Waymo, the autonomous driving car company, would be the smallest at approximately $181 billion.
Luria sees a massive upside in this setup. Currently, Google trades at just 16 times its forward earnings. But the analyst believes that the newly independent AI successor firms could swiftly hit a 23 multiple.
So what's in it for the shareholders? A projected share value increase of up to 81.82%, moving Alphabet's market capitalization from the current $2 trillion to a whopping $3.6 trillion.
But there's more! A breakup could lead to the following benefits:
- Better competition, fostering a more level playing field that might encourage growth and innovation.
- Improved focus on each business, with separate management teams working on specific areas, leading to better decision-making and strategic execution.
- A potential reduction in regulatory pressure, which could help lower legal and compliance costs.
- Enhanced agility, as smaller companies might be quicker to adapt to market changes.
The breakup idea is a controversial one, with Google being resilient and adaptable in the face of such proposals. However, lawsuits targeting Google's alleged monopolistic position and tendencies, as well as the DoJ's April victory, add an intriguing angle to the discussion. Critics have pointed out that Google intentionally degraded the quality of organic searches to force users to spend more time looking at the results (and ads), which suggests a more competitive market could be beneficial for everyone involved.
So, is a Google breakup on the horizon? Only time will tell. In the meantime, shareholders and tech enthusiasts alike can't help but wonder what the future holds. After all, the tech world thrives on disruptions and breakthroughs. Who knows? This could be the next big one. 😉
Source: Wall Street Journal and InvestorPlace
In the context of Alphabet's potential division, the breakup could boost the value of shareholders by up to 81.82%, as each sector, such as AI successor firms, could benefit from a increased multiple and improved focus, competition, and agility. However, the proposal remains controversial due to Google's historic adaptability, with critics advocating for a more competitive market to promote growth and innovation.
