Alphabet (GOOGL) Stock Is Growing but Should the Company Cut Down Its Share Repurchases?

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by Teuta Franjkovic · 3 min read
Alphabet (GOOGL) Stock Is Growing but Should the Company Cut Down Its Share Repurchases?
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Alphabet (GOOGL) stock price is going up in the pre-market. Will Alphabet change its approach to share repurchases?

Google’s parent company Alphabet somehow heightened its share repurchases, allocating more than $18 billion in order to buy back its shares in 2019. Should the company continue this way?

Google Share Repurchases: Does It Bring Benefits?

The figures are impressive. And Google decided not to reduce shares outstanding over the last few years, as buybacks have been more than offset by Google’s sizable share-based compensation. As per the company’s announcement, Google could intentionally boost its share repurchase allocations going forward.

Be it as it may, the program has not decreased shares outstanding over the last few years, as buybacks have been more than offset by Google’s sizable share-based compensation.

Both behemoths Alphabet and Facebook are born in the digital age. Both of them are giving generous profits. Google is definitely the no 1 search site (does anyone remember Yahoo or Altavista?). Facebook, on the other hand, is an obvious leader in social media.

Both companies give back the huge value for marketing managers and some would say that both companies created a duopoly in the industry, with huge profit margins.

However, we think that as long as everybody has their piece of cake (via their stocks) – everybody wins.

Both Alphabet and Facebook stocks fell following their recent earnings reports on concerns about slowing growth. Facebook posted its slowest revenue growth rate ever at 25% in its most recent quarter. These are bigger numbers than we are used to but it shows that the social network is starting to grow up.

Alphabet, on the other hand, saw the growth in its advertising business. However, that didn’t go as expected. It grew only 17% in the quarter, and 16% for the full year. Some skeptics are saying that the small growth may be the indicator that its days as a growth stock may be numbered. We believe that is not the case.

Alphabet (GOOGL) Stock and Company’s Earnings

The company’s shares are doing rather well. At the time of writing Alphabet (GOOGL) stock was $1,519.40 (+0.44%) up in the premarket.

However, let’s just look up at the earnings for the quarter, shall we? Google LLC’s parent company Alphabet Inc. said, at the beginning of this month, its revenue stood at $46.07 billion in the fourth quarter of 2019, rising 17% on an annual basis. The company reported diluted earnings per share (EPS) at $15.35 in the same trimester, a growth of 20% year-over-year. Net income increased by 19.2% to $10.67 billion in the closing quarter of fiscal 2019 while operating income landed at $9.27 billion over the same period, climbing 12.8% annually.

For the first time, Alphabet disclosed Cloud and YouTube revenue. YouTube generated $4.72 billion in ad revenue during the three-month period ending December 31, up from $3.61 billion a year ago, while Cloud’s revenue amounted to $2.61 billion, increasing from $1.71 billion recorded in the same trimester in 2018.

For the whole year 2019, the company posted revenue of $161,86 billion, surging 18.3% compared to 2018, while its diluted EPS rose 12.5% year-over-year to $49.16 in the same year. Tech giant’s net income stood at $34.34 billion, a jump of 11.7% on an annual basis, while its operating income was up by 24.4% to $34.23 billion in fiscal 2019 compared to the previous year.

“Our investments in deep computer science, including artificial intelligence, ambient computing and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet,” the company’s CEO Sundar Pichai said in a statement.

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Teuta Franjkovic
Author Teuta Franjkovic

Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.

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