4 ms·
"The current road Alphabet is on doesn't seem to me to end in a happy place" I think it's a natural (good) road. Alphabet should be a good opportunity for Goo
by marcofloriano 10y ago
"The current road Alphabet is on doesn't seem to me to end in a happy place"
I think it's a natural (good) road.
Alphabet should be a good opportunity for Google owners to invest in outside business with a lot of potencial, like Space X. When you are "just" Google, it's hard from a business view point to invest in outside business. It's more like acquisitions and fusions. But with a strong group like that, you can make more moves with investors money. And Alphabet have a lot.
If your bets isn't giving you good results, let's start put some coins outside. But it's just a teory (don't have actual facts to support).
- samfisher83 10y agoIn finance class we learned it should be investors who make that decision not google. Therefore they could just break it into google and all its other companies so the investor can invest what they chose to. If they want to invest in risky bets they can. If they want to invest in core google assets they can. The issue is other than ad words their other bets are not nearly as profitable.
- deleted 10y ago[deleted]
- linkregister 10y agoI think that a "should" statement is a bit inapplicable. Investors may choose a different stock if they don't like the particulars of Alphabet. It has some significant downsides: founders owning 10% of equity but having a majority of votes; large investments in ventures unlikely to succeed (Fiber, Calico).
- hueving 10y ago"should" from a market efficiency standpoint. By being an all or nothing proposition, it makes it hard for investors to buy in if they are fundamentally against one technology (e.g. user data mining) but want to support another (e.g. self driving cars). It ultimately results in the entire company being less valuable than the sum of its parts (think Yahoo where it's Alibaba holdings alone were worth more than its market cap). In other words, by having so many diverse bets, investors in Alphabet have to buy into all of those bets. So the number of investors that believe in all of those bets is smaller than the sum of all investors that would invest in each one individually.
- waqf 10y agoI guess nobody ever invests in index funds, then.
- goldfeld 10y agoThe members of an index fund are supposed to have little correlation; not the same goes for Alphabet's divisions.
- twblalock 10y agoQuite a few index funds comprise members that have very high correlation with each other, e.g. funds that track sector-specific indexes in health care, natural resources, etc.
- hueving 10y agoAn index fund won't suddenly invest in unicorns or whatever else on a whim. They follow a particular plan (e.g. track a sector, track the S&P, whatever).
- morgante 10y agoIt all depends on whether investors or Google executives are better allocators of capital. Google executives certainly think they're better and for the time being it seems investors agree.
- hueving 10y ago>it seems investors agree. It seems some* investors agree. There is no way to know how much more they could be worth if they were separate entities.
- deleted 10y ago[deleted]
- kmonsen 10y agoThat is what investors like to think. Google management thinks differently (and that is their right for their company).
- deleted 10y ago[deleted]
- Retric 10y agoThere is a halo effect around new ventures which helps recruiting. Google got a lot of smart people get really excited building great software to serve advertising. But, if all they do is maintain software they are not going to attract top talent without obscene salary's. PS: I suspect they probably spent less on self-driving cars than they gained back from that Halo.
- hkmurakami 10y agoFwiw afaik it would be more tax efficient if Google makes those investments rather than investors reallocating after dividend / cap gains tax.
- vslira 10y agoMoonshot sounds a lot better than tax arbitrage-based VC
- justincormack 10y agoInvestors do not have control of Alphabet, they don't have voting rights in effect.
- 6stringmerc 10y agoNot being tongue in cheek here - actually quite serious: How do you feel about Apple and Braeburn Capital?
- jdmichal 10y agoOr Berkshire Hathaway, to really nail the point home.