Google parent company Alphabet (NASDAQ:GOOG) was recently hit with a fine of more than $100 million in Russia – but shareholders don’t need to worry.
Penalty Not a Problem
According to the court ruling, Russia found that the company repeatedly failed to delete banned content. Google itself reportedly does not want to comment on this yet. Government critics see this as censorship of the free Internet in Russia. However, I don’t see any immediate impact on the overall performance of Alphabet. The stock is in the best possible position for the long term.
After all, it operates the largest and most important search engine in the world. In this way, Alphabet profiles large parts of the Internet and builds the most comprehensive data services and advertising platforms around these profiles.
Revenues are estimated to reach about $254 billion this year, rising to $298 billion next year. In the process, Google will earn a good $73 billion in 2021 and a good $75.9 billion in 2022. This corresponds to a price-earnings ratio (P/E) of a good 27 and 26, respectively. For a company that will continue to grow strongly in the future, I consider this valuation to be very favorable.
Share Prices Rise to New Highs
I also expect share prices to rise in the coming year. Alphabet has already gained 85% this year. Within the past three years, we’ve seen an increa 192%. In ten years, the stock gained 962% and in 15 years 1364%. You can see that it has been going up virtually continuously.
Unfortunately, we as investors will apparently have to do without dividends from the company for some time to come. Alphabet invests in growth. That growth, however, is working so plausibly and transparently over the long term that, for once, I’m willing to leave the dividend in the company.
Google is currently one of the great enduring favorites on the stock markets. I expect its performance to remain stable in the coming year, completely independent of the development of the COVID-19 pandemic or the pandemic economy.