Google parent company, Alphabet, has reported earnings of US$69.7 billion for the second quarter, up 13% on the same period last year, and $2 billion higher than Q1. However, profits for Q2 were $16 billion, compared to $18.5 billion in Q2 2022. It’s next earnings report is due in late October.
Sundar Pichai, CEO of Alphabet and Google, said the fall in reported profit could be attributed to increased investment in its “deep” technical capabilities: “In the second quarter our performance was driven by Search and Cloud. The investments we’ve made over the years in AI and computing are helping to make our services particularly valuable for consumers, and highly effective for businesses of all sizes.
“As we sharpen our focus, we’ll continue to invest responsibly in deep computer science for the long-term.”
Ruth Porat, the firm’s chief financial officer, said the company will continue to pursue a growth-oriented strategy: “Our consistent investments to support long-term growth are reflected in our solid performance in the second quarter, with revenues of $69.7 billion in the quarter, up 13% versus last year or 16% on a constant currency basis.
“We are focused on responsible capital allocation in support of our growth opportunities.”
Shares in Alphabet rose almost 5% in after-hours trading on NASDAQ, the tech-dominated US stock index, to top $110.
On July 15 2022, the company executed a 20-for-one stock split with a record date of July 1, 2022.
Update July 7 2022: Alphabet Plans 20:1 Stock Split After Shareholder Green Light
After gaining shareholder approval at its annual general meeting in June, Alphabet—parent of the Google brand—is planning to conduct a 20:1 stock split of its shares, after trading on Friday 15 July 2022.
From that date, each shareholder will own 20 shares for each single share they held in the NASDAQ-listed company prior to the split.
Having increased in value nearly 40 times since the company went public in 2004, Alphabet is splitting its stock to make its shares more accessible/affordable to retail investors – a vital source of capital.
Alphabet shares closed on Wednesday July 6, 2022 at $2,291. If they remained at the same price between now and the close of trading next Friday, each of the new shares would be worth a shade over $114.
Although each share is worth less once a split has taken place, investors don’t lose out as their overall shareholding is worth the same as before the move.
Research from Bank of America suggests stock splits have historically been positive for companies that complete them, as they tend to outperform the wider market in the 12 months after a split takes place.
Update April 27 2022: Google’s Parent Company Alphabet Sees Shares Fall Following First Quarter Report
27 April: Shares in Alphabet, Google’s parent company, fell yesterday in April after the giant tech company reported weaker-than-expected first quarter earnings and revenue figures.
Alphabet’s profits plunged $1.5 billion in the first quarter compared with 2021, as weak results from the company’s YouTube division highlighted slowing momentum in online advertising.
Alphabet reported a 23% increase in revenue to $68 billion in the three months to March this year, slightly below forecasts. This compared with a 34% increase in revenues over the same period in 2021.
Alphabet’s share price has dropped by about 20% since the start of this year. Steepling inflation, ongoing post-pandemic supply chain disruption and the conflict in Ukraine are forcing advertisers to review their spending plans.
As well as Google, California-based Alphabet owns the Android smartphone operating system along with video platform YouTube. The company makes more money from digital advertising than any other business.
Ruth Porat, chief financial officer of Alphabet and Google, said: “We are pleased with Q1 revenue growth of 23% year over year. We continue to make considered investments in capital expenditure, research & development and talent to support long-term value creation for all stakeholders.”
Why Own Shares?
Before buying shares in any company ask yourself why you’re taking that decision. Does the company have great future prospects with a share price that could go from strength-to-strength? Or is there takeover talk in the offing that could potentially drive up a company’s share price?
Maybe the company you’ve identified is on a recovery mission and its share price is starting to recover from previous lows.
How to Buy Google Stock Shares
There are several steps to take once you’ve satisfied yourself about the reasons for buying shares in a particular company, such as Google.
1) Open an account
Whether you’re a seasoned share trader, or someone who is brand new to stock market-based investments, if you want to buy shares in Alphabet, you’ll need to open an account with a regulated brokerage.
Stockbroking is a competitive market place and services for DIY investors come in a range of guises—from online investing platforms run by some of the biggest names in financial services, to investment trading apps that work off your smartphone or tablet.
Before opening an account, bear in mind the following:
- Keep your ultimate financial goals in mind
- Be prepared to ride out stock market ups and downs
- Aim to keep trading costs to a minimum
- Remember that share investing can prompt tax charges, for example, CGT when selling part of your portfolio.
And before buying any shares ask yourself these questions:
- Should I take financial advice?
- Am I comfortable with the level of risk in question?
- What’s my investing budget?
- Can I afford to lose money?
- Do I understand the company in which I’m looking to invest?
- Am I protected if my platform provider/adviser goes out of business?
2) Find out where Alphabet is traded in Australia
The ticker symbol for Alphabet is GOOGL and the company is traded on the Nasdaq market in the US. In Australia, the Nasdaq market opens between 11:30pm-1:30am AEST depending on daylight savings.
You should be able to buy US shares through most brokerage accounts. Buying shares in US dollars incurs a foreign exchange fee (typically around 1%) unless you fund the purchase from a US dollar account.
Most brokerages also charge a slightly higher transaction fee for buying US shares rather than local shares on the ASX; however, it’s worth comparing the fees charged by different brokers if you plan to trade US shares regularly.
You will be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk depending on how the Australian dollar compares compared to USD.
Since Australia and the US have a Double Tax Agreement, any dividends from US shares will be taxed in the US. However, you will be required to declare all of your foreign income on your Australian tax return.
As with Australian shares, any profit on US shares will be subject to Capital Gains Tax.
3) Do your research
To find out more about Alphabet, go online and visit the company’s investor relations page.
4) Confirm your investing strategy
People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts over time.
The latter method is often referred to as a means of ‘dollar-cost averaging’, a stock market hack which may help you pay less per share on average over time. Rather than waiting to build up a lump sum, it means an investor’s money is being put to use in the market straightaway.
5) Place an order
Once you’re ready to buy shares in Alphabet, log in to your investing account or trading app. Type in the ticker symbol GOOGL and the number of shares you want to buy, or the amount of money you’re prepared to invest.
6) Review Alphabet’s performance
Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you review how each component is performing on a regular basis: monthly, quarterly, or annually.
Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required—to maintain the status quo, buy more stock, or sell existing shares.
How To Sell Shares
If you’re pleased with the performance of your shares and want to take a profit, you’ll want to sell your holdings. To do so, log in to your investing platform, type in the ticker symbol and select the amount that you want to sell.
Note that if you’ve made a substantial profit, you may be liable to pay Capital Gains Tax (CGT) when you come to sell your holdings. However, there is a CGT discount of 50% for Australian individuals who own an asset for 12 months or more. This means you pay tax on only half the net capital gain on that asset.
Find out more here about CGT, rates and allowances.
How To Invest In Alphabet Via A Fund
Investing directly in individual stocks can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.
Investing directly in individual companies can, however, leave you vulnerable to stock market volatility and unforeseen swings in share prices. That’s why, financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold hundreds, if not thousands, of company shares.
Being a major component of the Nasdaq index, Alphabet is found in many funds incorporating a bias towards the US.
Note: When investing, it’s possible to lose some, and very occasionally all, of your money. Past performance is no prediction of future performance and this article is not intended as a…
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