Google's Ad Sales Soar - Plans To Split Stock

Parent Company, Alphabet, Plans To Split Stock Again To Make Stock More Accessible

Google's digital advertising empire continued to perform well throughout the holiday shopping season, causing Google parent company Alphabet's (NASDAQ: GOOGL) profit to soar by 36% in the final three months of 2021.

The findings unveiled Tuesday attest to how technology behemoths have evolved in order to become even more successful during a nearly two-year pandemic that has shaken the economy.

Google parent Alphabet also revealed intentions for its first stock split since 2014, in a show of confidence meant to make its shares more accessible. The planned 20-for-one split would reduce the price per share July, while keeping Alphabet's market value the same. Following the announcement, Alphabet's stock rose nearly 9 percent in extended trading.

In 2020, Google suffered its first year-over-year revenue drop in the company's history.

As a result of government-imposed lockdowns, consumers began ordering more takeout and shopping more online, which only strengthened Google's biggest online ad network as a magnet for businesses seeking to engage with customers gathered at home. “Helping them thrive is more important than ever," Sundar Pichai, Alphabet'S CEO, told analysts during a conference call.

Google earned $61.2 billion in ad sales last October-December, up 33% from the comparable period a year earlier.

Google's ad business once again generated the majority of Alphabet's income. The Mountain View, California-based company made $20.6 billion in revenue, or $30.69 per share, surpassing the average estimate of $27.66 per share from analysts polled by FactSet Research. Revenues increased 32% from the same period last year to $75.3 billion, exceeding expectations for revenue of $72.3 billion by analysts.

The eye-popping figures drove Alphabet's stock price to nearly $3,000 in extended trading. If the stock is still trading around that level at the time of the proposed share split, shares would be reset at about $150 each, for a reduction of 95%.Because the number of outstanding shares would be 20 times greater than presently, Google stock market value, which is now around $2 trillion, would stay unaltered.

Lowering Alphabet's per-share price might set the stage for the firm to be added to the bellwether Dow Jones Industrial Average after the split is complete, according to CFRA Research's Angelo Zino. That's what occurred with Apple shortly after the iPhone maker completed a seven-for-one stock split in 2014.

In 2021, Google's ad revenue surpassed $200 billion for the first time in the company's 23-year history. Last year's ad sales of $209.5 billion were a 55% increase over 2019's ad sales of $134.8 billion, marking the end of an era before the pandemic changed everything.

Lagging growth in Google's YouTube video service stood in contrast to the company's recent quarters, which have featured an increased emphasis on advertising. In the most recent quarter, YouTube earned $8.6 billion in ad revenue, a 25% increase from the previous year. In 2021, YouTube received $28.8 billion in advertising , nearly double 2019.

Google's success has provoked regulators and legislators to assail the company for allegedly abusing its popular search engine and other platforms such as Maps, Gmail, and Chrome to unfairly dominate the market. After 2020, the U.S. Department of Justice and state attorneys general brought a number of antitrust lawsuits regarding similar allegations.

Several jurisdictions have filed lawsuits against Google, claiming that it secretly tracked its users in violation of their privacy settings to assist advertise services even if they changed their privacy settings. The AP initially reported on this issue in 2018.

Google has denied any wrong doing and is defending itself against lawsuits that might jeopardize its future advertising revenue.

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