To The Moon

🌟🌟🌟On Tuesday this week, the US Department of Justice (DOJ) made recommendations for Google $Alphabet(GOOGL)$  search engine business practices, indicating that it was considering a possible break up of Google as an anti trust remedy.

According to DOJ such remedies would prevent Google from using products such as Chrome, Play and Android to advantage Google search and Google search related products and features - over rivals or new entrants.

Should I sell my Google stock after this Antitrust Ruling?

Google share price dropped on Wednesday following this latest development but went up marginally on Friday by just 0.7%.  Google is down 2.6% during the past 5 days. However Google has risen 18% year todate.  In 2023, Google is up 17%.

While this has serious implications for Google but the judge Amit Metha will not be ruling on the remedies until August 2025.  After that the appeals process would further delay things.  A final resolution  could potentially drag on for years and even then Google could win the appeal or remedies might not be that harmful for Google. 

To put it simply, the proceeding could take a long time.  Therefore I would not be panic selling my Google stock anytime soon. 

If Google  gets broken up eventually, it maybe worth more than it is as a whole.    Google is valued at USD 2 Trillion in market capitalisation.  In the last 12 months it has generated about USD 328 billion in sales and USD 135 billion in earnings before interest, taxes, depreciation or EBITDA.  Sales and profits are expected to grow about 11% and 17% respectively in the coming 12 months. 

Search related services account for about 70% of sales.  YouTube related services account for another 20% and 10% from its Cloud business.   Then there is Waymo which has completed 100,000 self driving cab rides each month, making it a real self driving player. 

All the above businesses could add up to about USD 2.6 trillion.  This is about 30% more than its market capitalisation.  It implies a share price of USD 210 per share compared to Friday's closing price of USD 163.

While the breaking up of Google may not happen in the near future, it is good to know that it may be worth more if it is broken up.  Think Alibaba which split itself into 6 companies. Investors are waiting for the IPOs of its companies to realise more value. 

Compared to the other Magnificent 7 stocks, Google shares are trading at about 18 times EBITDA, which is a discount to its peers. 

I have invested in Google since 2022.  In that time, I have seen it drop to below USD 100 per share but I held on knowing that it is undervalued and I have high conviction on the stock.  Thankfully it has since recovered. 

There will always be new challenges ahead for Google as it navigates through stormy waters but with its strong market share in search engine business as well as its various businesses, I strongly believe Google will not only survive but thrive. 

Should I sell my Google Stock now?  That would be a definite NO.  If Google shares price drop further, I will simply buy more. 

As the late Charlie Munger likes to say The Big Money is not in the Buying and Selling but in the Waiting.    He also said that the first rule of compounding is Never Interrupt It Unnecessarily. 

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