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Alphabet (GOOG) Breakup Could Increase Value by 50% - Morgan Stanley

January 25, 2021 9:08 AM EST
Get Alerts GOOG Hot Sheet
Price: $152.26 +0.21%

Rating Summary:
    41 Buy, 6 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Morgan Stanley analyst Brian Nowak reiterated an Overweight rating and $2,050.00 price target on Alphabet (NASDAQ: GOOG) noting that the sum of the parts valuation doesn't matter...until it does. Considering the political machinations in DC and the possibility of anti-trust actions, the analyst sharpened his pencils and dove into the YouTube and Alphabet (NASDAQ: GOOGL) Cloud segment disclosures to better understand the underlying dynamics of these businesses and the potential impact on valuation. The short answer is that he sees a sum of the parts valuation of $2,800, ~50% above where shares are trading today.

What are the components?

  • ~$705bn Mobile Search Business
  • ~$300bn Desktop Search Annuity
  • ~$365bn YouTube Advertising Business
  • ~$330bn Google Cloud Opportunity
  • ~$105bn Waymo Opportunity

Despite the positive sounding nature of this note, the analyst only focused on the ripples we can see not the currents that lie beneath the surface. He stated "What We're Not Giving GOOGL Any Credit For: In addition, we see multiple areas that have potential value that we are not including in our analysis, including: YouTube Subscriptions (YouTube Premium/YouTube TV), Stadia, Verily, Calico, Google Fiber, Wing, DeepMind, X, as well as venture capital units GV and CapitalG."

For an analyst ratings summary and ratings history on Alphabet click here. For more ratings news on Alphabet click here.

Shares of Alphabet closed at $1929.36 yesterda



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