Google: Subscription Business, The Big Driver To Growth Going Forward


  • Google missed earnings, causing the stock price to drop. We anticipate that negative sentiment will suppress the stock price near-term.
  • Investments into YouTube and focus towards subscription opportunities drives growth going forward.
  • Alphabet trades at a discount to forward earnings and growth, but at a bigger discount than some of the other tech conglomerates.
  • We also anticipate that the stock will reach $138+ by year end given a summer recovery in advertiser spend, thus asserting +32% upside from where the stock is trading.
  • Alphabet only trades at 18x FY ’25 earnings given our even more conservative growth inputs, which means there’s a high margin of safety owning the stock.

The new building at Google Bay View campus in Mountain View, California.


Heading into Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) quarter, we were skeptical of ad-results, and took the sidelines before developing our take on Alphabet, and what a fair intrinsic value should be. Despite the weaknesses tied to the ad-business model we like the

Morgan Stanley

Alphabet severance charge offs (Morgan Stanley)

Trade Theory

Google Financial Model (Trade Theory)

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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