5 ms·

google is supposedly worth 800 billion. hasnt paid a dividend and probably never will. valuations are as much measurements of cult-ness as actual sustainable m

google is supposedly worth 800 billion. hasnt paid a dividend and probably never will. valuations are as much measurements of cult-ness as actual sustainable monetary gain. I'm suspicious of founder-led, constantly "reinvesting" companies or companies that stay private for too many years. Seems Bernie Madoff-y.

Pyxl101 8y ago
Investors do not demand that companies pay a dividend, and prefer companies do not issue a dividend, when the company is growing rapidly. Investors would prefer to keep that cash in the business, to use as fuel for further growth. Recently, Alphabet and Google revenue growth has been around or above 20% per year. Take a look at their Q4 2017 earnings statement [1]. Here is a table based on figures in Item 6: 2013 $55,519,000 2014 $66,001,000 2015 $74,989,000 (+14% YoY) 2016 $90,272,000 (+20% YoY) 2017 $110,855,000 (+23% YoY) Compare to the net operating revenue of a company like Coca-Cola [2], which pays about $1.50 dividend per share per year on a price of about $0-47 per share: 2013 $46,854,000 2014 $45,998,000 2015 $44,294,000 2016 $41,863,000 Most investors in companies like Google expect to get more return by keeping cash within the business to use for growth, resulting in share appreciation, than they would get by receiving a dividend. If growth slows or stops then investor sentiment will change. There are other figures to consider, but these figures represent significant growth for a company of Google's size. Madoff's business was a scam and pyramid scheme that depended on a steady stream of new investors to pay off his old investors. Google and Coca-cola operate real businesses that collect revenue from paying customers; Google's is growing rapidly while Coke is holding steady or declining. There's no similarity to Madoff. [1] https://abc.xyz/investor/ https://abc.xyz/investor/ [2] https://s22.q4cdn.com/984101753/files/doc_financials/annual_2017/2017-annual-report-on-form-10k.pdf https://s22.q4cdn.com/984101753/files/doc_financials/annual_...
- nontechdude1 8y ago
  fair enough. that is quite impressive growth. i've been listening to too many peter thiel talks.
- brisance 8y ago
  Nobody should pay any attention to the metric because it's a silly way to value a company. Think about it: there are about 7 billion pairs of eyeballs, ignoring maybe 1% who are legally blind and/or Braille ads do not exist. 110/7 => Google revenue is generating $15.7 per viewer per year. And Google expects people to believe that this value will increase each year, when the denominator is increasing and the numerator is decreasing due to competition. Viewed as an advertiser (Google's real customers), I would like this number to come down over time.
  - deleted 8y ago
    [deleted]
  - gbear605 8y ago
    Google definitely isn't reaching all (non-blind) people on Earth yet, and even then most of the people that is it reaching can probably be monetized a lot more.
    - dillondoyle 8y ago
      Plus growth in digital ads (and the duopoly that virtually all new digital spend goes to FB or Google)
- jjeaff 8y ago
  If a company can perpetually grow their stock value and never have to pay dividends, smart investors would always prefer stock appreciation to dividends. You can sell off shares of the company to get your returns. Which will be taxed at capital gains rates. Any money you receive through dividends will have had to pay corporate tax first.
brisance 8y ago
Have you seen AMZN's valuation lately? ^_^
elchief 8y ago
Growth companies don't pay dividends. Google still thinks they're growing, I guess. Or can grow by acquisition

Pyxl101 8y ago

Investors do not demand that companies pay a dividend, and prefer companies do not issue a dividend, when the company is growing rapidly. Investors would prefer to keep that cash in the business, to use as fuel for further growth. Recently, Alphabet and Google revenue growth has been around or above 20% per year. Take a look at their Q4 2017 earnings statement [1]. Here is a table based on figures in Item 6: 2013 $55,519,000 2014 $66,001,000 2015 $74,989,000 (+14% YoY) 2016 $90,272,000 (+20% YoY) 2017 $110,855,000 (+23% YoY) Compare to the net operating revenue of a company like Coca-Cola [2], which pays about $1.50 dividend per share per year on a price of about $0-47 per share: 2013 $46,854,000 2014 $45,998,000 2015 $44,294,000 2016 $41,863,000 Most investors in companies like Google expect to get more return by keeping cash within the business to use for growth, resulting in share appreciation, than they would get by receiving a dividend. If growth slows or stops then investor sentiment will change. There are other figures to consider, but these figures represent significant growth for a company of Google's size. Madoff's business was a scam and pyramid scheme that depended on a steady stream of new investors to pay off his old investors. Google and Coca-cola operate real businesses that collect revenue from paying customers; Google's is growing rapidly while Coke is holding steady or declining. There's no similarity to Madoff. [1] https://abc.xyz/investor/ https://abc.xyz/investor/ [2] https://s22.q4cdn.com/984101753/files/doc_financials/annual_2017/2017-annual-report-on-form-10k.pdf https://s22.q4cdn.com/984101753/files/doc_financials/annual_...

nontechdude1 8y ago
fair enough. that is quite impressive growth. i've been listening to too many peter thiel talks.
brisance 8y ago
Nobody should pay any attention to the metric because it's a silly way to value a company. Think about it: there are about 7 billion pairs of eyeballs, ignoring maybe 1% who are legally blind and/or Braille ads do not exist. 110/7 => Google revenue is generating $15.7 per viewer per year. And Google expects people to believe that this value will increase each year, when the denominator is increasing and the numerator is decreasing due to competition. Viewed as an advertiser (Google's real customers), I would like this number to come down over time.
- deleted 8y ago
  [deleted]
- gbear605 8y ago
  Google definitely isn't reaching all (non-blind) people on Earth yet, and even then most of the people that is it reaching can probably be monetized a lot more.
  - dillondoyle 8y ago
    Plus growth in digital ads (and the duopoly that virtually all new digital spend goes to FB or Google)
jjeaff 8y ago
If a company can perpetually grow their stock value and never have to pay dividends, smart investors would always prefer stock appreciation to dividends. You can sell off shares of the company to get your returns. Which will be taxed at capital gains rates. Any money you receive through dividends will have had to pay corporate tax first.

brisance 8y ago

Have you seen AMZN's valuation lately? ^_^

elchief 8y ago

Growth companies don't pay dividends. Google still thinks they're growing, I guess. Or can grow by acquisition