How Can I Buy Alphabet Shares On The Stock Market: A 2021 Guide
Every time Google acquires another globally recognized company, don’t you wish you had a cut of that action? Well, you just might. Alphabet share trading is one of the top Wall-street-approved long-term investment options, and 2021 is the best time to add GOOGL to your instrument portfolio. Today we will take a deep dive into trading Alphabet shares, including how and why you should trade
What Is Google Alphabet?
You probably know what Google is, but might have never heard of Alphabet, unless you are somehow connected with the tech industry. So, to fully comprehend Alphabet share trading, let’s start at the very beginning. Google, the most recognized search engine, was founded in 1998 by two of Stanford’s PhD students: Larry Page and Sergey Brin in Silicon Valley, CA. As you can see from the technical giant’s modern performance, the company grew rather quickly, got listed in 2004, and had one of its major price spikes in 2006 after acquiring YouTube.
Considering all the acquisitions and development, Google had to restructure and become a part of Alphabet—a massive holding that operates all Google-related companies and services. This way, when we look at the Alphabet share price, we see a representation of a wide range of enterprises, including the Android operating system, Gmail, Ads, and a lot of others. Consequently, the investors also benefit from a multi-layered, versatile approach that comes along with betting on Alphabet shares, listed under GOOG and GOOGL on NASDAQ.
It’s also worth mentioning that Alphabet is a part of globally-recognized FAANG technology stocks. FAANG stands for Facebook, Amazon, Apple, Netflix, and Google (now Alphabet) and it’s no secret that these five more or less run the world. Pro traders will confirm that as long as you know your way around the market, you could sustain off FAANG shares alone for pretty much your entire trading career.
Now, how exactly can an everyday retail trader approach profiting off Alphabet share price fluctuations? Alphabet's stocks divide into three categories: A, B, and C. A-class shares listed as GOOGL are typical stocks with the one-share-one-vote structure, meaning that shareholders have a right to participate in the company’s decision-making process. The B-class shares are not accessible for public traders, as they are only available to founders and high-ranked insiders, with ten shares per vote each. Finally, the C-class shares are the ones that we can relatively easily purchase and sell on the open market, without gaining any voting rights.
How to buy and sell Alphabet share CFDs
One of the safest and most straightforward ways to benefit from Alphabet shares price changes is through Contracts For Difference—CFDs for short. CFD allows online traders to gather the monetary rewards of asset value shifts, without having to own the physical instruments. In other words, you earn your income not from the actual price hike, like an old-school investor but from the magnitude of that hike. Another advantage of choosing CFD over genuine stocks is the ability to exploit both hikes and cuts in the rate. All that matters to you is that the price keeps moving, and on the modern market it always does.
To start trading Alphabet shares price CFDs you will need to open an account with a reliable broker that gives access to stock CFD trading. Once you go through the registration process, you’ll get your personal trading platform login info. That’s your key to anything you will ever do on the market, so make sure to keep it secure. After you have downloaded the platform for free, enter your login credentials and enjoy trading.
To buy Alphabet share CFDs, go to the Market Watch and right-click on any item on the list. In the drop-down menu, choose the Symbols option and then pick Google from the instrument list. As soon as it’s added to your tool selection, right-click on the item you want to purchase and place a New Order by choosing Buy. Very simple, as you can see.
Apart from allowing you to place trades, your MT4 terminal will also serve a good deal of handy purposes. You will be able to track the Alphabet share price in real-time, compare its movement to past data, plot the potential future changes, and a lot more. A quick tip: make sure you get a solid grasp on all the available tools within the platform before you begin trading. This way, you can react faster and seize more opportunities.
Selling Alphabet share CFDs is just as easy as buying them. Log into your MT4, and go through the same process of finding the Google instrument in the Market Watch. Right-click the instrument and select Sell under the New Order. And that’s it.
At this point, you might be wondering: ok I get how to trade on share price Alphabet changes, but why would I do that? There are so many highly profitable instruments on the market, why stop at Google. And while it’s absolutely fair to say that Alphabet shares are not the ultimate solution for all traders, there are some very strong reasons to consider adding them to your portfolio.
Why you should consider Alphabet share trading
First thing first, it’s Google after all. Even when you don’t comprehend the full gravity of Alphabet’s influence and money flow, you know that Google is pretty almighty when it comes to things like online research, and particularly ads. Judging from the numbers, ads will carry on being one of the most prominent income sources for the company, as long as they continue to evolve alongside arising marketing trends.
The next thing to keep in mind is that so far Google has been very good at pleasing the public. The company’s business model was very flexible from the start. The founders knew that the search engine alone won’t drive their profits through the roof, no matter how popular and successful it is. That’s why there was eventually a need for a holding like Alphabet—Google just kept on becoming more versatile and complex. For the investors, it means that despite the fierce competition within the tech sector, Alphabet shares might just keep on pleasantly surprising, as it seems like Google still has plenty of great ideas up the sleeve.
Finally, we are still living through the stage of great uncertainty. The new normal introduced by the global pandemic, took the digitalization of modern society to a whole new level. With school classes, business meetings, and even court sessions moving to virtual chatrooms, tech giants like Google have a lot to give and it very obviously reflects on their financial success. Not to mention, we also entertain ourselves differently now. With traveling and public place outings being off the table, YouTube’s daily watch hours went from 250 million in 2019 to 1 billion in 2020. That’s a lot of ads right there.
Overall, as you can see, trading on the Alphabet shares price can be a wise decision for both tech-only investors and those with wider portfolios. Now, let’s get more specific and discuss what factors you need to consider when making Google shares trading decisions.
How to trade Alphabet share price changes
Even if you are just at the beginning of your trading career, you probably know that trades don’t get placed for no reason. Well, at least the successful trades don’t. In fact, the most important part of the trading process is not the order placement, but the thought process leading up to it. Disregarding your style, strategy, and instrument of choice, you will need to analyze the market in order to see what can be done, when, and how.
There are two general directions to consider: technical and fundamental analysis. While these approaches have drastically different ideas at their foundations, they can be used together. But to better understand how to effectively combine the analytical techniques, you should first get a grasp on how each method works. Today, for the sake of keeping this to the point, we will skip over the theory and get down to examples. Starting with the role of technical analysis in Alphabet share price trading.
Alphabet shares price technical analysis
Technical analysis is the study of the price movement over the entire period of any instrument’s existence. For Alphabet shares price traders this approach goes all the way back to 2004 when the shares were first listed on NASDAQ. The initial rate began at $51 per share, and this number can be considered GOOGL’s all-time lowest since it only went upwards from thereon.
The first price record
Within the first ten years on the market, the stock lived through rather exciting times. The volume was increasing steadily and traders were quite happy with their returns, especially after the 2006 YouTube acquisition. In November 2007 the formerly Google, now Alphabet share price reached its first historic high of $357. But over the course of the following year, the price went down to $155 due to the effects of the Great Recession.
The stock entered the new decade at $295 in January 2010 and stayed snug within the $230 to $330 range for quite a while, before breaking it at $415 in March 2013. Alphabet’s ambition drove the company through a massive amount of innovation, acquisitions, and, as a result, share price hikes. This way, by February 2020 GOOGL cost $1,518 a share, making a nearly 3000% jump from where it started. And then, the pandemic hit.
The year 2020 wasn’t easy for anyone, including such large enterprises as Google-Alphabet. Although the Alphabet share price didn’t break below the $1,000 mark, it still gave its investors a fair deal of grey hairs in the process. But being a tech company, Google did not have it as bad as the companies within the Travel and Entertainment industries, for example. By July 2020 the share had reached back to the previous historic high of over $1,500 and continued to go up. Here are a few factors that contributed to the rather quick value recovery:
- Ads popularity in general and the direct response ads, in particular, continued to grow. Despite the initial shock, nearly every business on the planet went through, the companies across the globe quickly came back to promoting their goods and services online. With Alphabet’s Ads ecosystem being a leader in the segment, it’s not very surprising that the money kept on flowing from this source.
- As previously mentioned, the global need to stay inside encouraged an out-of-proportion online engagement level. Anything from fun and games to business conferences and school sessions went virtual, and Google already had a decent platform to facilitate all this activity. And since everything we do online essentially translates into money for the tech giants, whether through ads or through premium subscriptions, Alphabet’s tool versatility was a great asset to the company during the first stages of the pandemic crisis.
- Apart from continuing to gather the benefits of multiple effective online platforms, Alphabet took several noteworthy cost control measures. For instance, they have paused the hiring and the office building streams. While these decisions might not have reflected very well on the overall American economy, the Alphabet shares price did get back on track eventually, in turn contributing back to the country’s money flow balance.
- Last but not least, Alphabet as well as many other large companies, continued to buy back their shares from the investors to keep the rate afloat. According to the experts, it was the buybacks that didn’t let the rate drop below $1,000. What’s more, Google has remained very clear about intending to keep purchasing their stocks back, meaning that the current volumes are likely to stay abundant.
The beginning of 2021
And now here we are in the early months of 2021, where the Google shares seem to be entering a new era of glory. After an intense, but rather quick crisis recovery, the Alphabet share prices are stronger than ever before. The year began at just over $1,700 and continued to reach new highs with only one brief dive around the end of January. With the new record high set at $2,118, it is fair to say that Google investors might have a very fruitful year ahead.
But how about the not-so-obvious factors that influence the Alphabet share price? Since we’ve discussed the technical representation of Google stock value movement, it makes sense to spend a few moments considering the fundamental aspects of GOOGL trading.
Alphabet shares price fundamental analysis
Every instrument on the market will have a distinct set of influential factors. Depending on the location, the industry, and the size of the company, it will have a certain degree of connection to the economy, both local and global. For example, during the early stages of the Coronavirus pandemic, the public’s attention was entirely on pharmaceutical and MedTech enterprises in large economies like the US and the UK. Since these companies would essentially end up dictating the course of social and economical development, it was crucial for traders everywhere to pay close attention to their fundamental stats.
Being a tech giant, Alphabet also plays a tremendous role in our digitalized society. What’s more, Google and its sister companies under Alphabet lead the S&P 500 index, the list of largest and most authoritative American companies. Below we will take a look at three top noteworthy fundamental components of the Alphabet share price.
Whether you are a trader or not, the very first thing you will look at to judge any company’s value is the revenue. From the analytical perspective, it’s not the exact number that matters but the proportion of that amount to the firm’s size and the contrast with the preceding years. In Google’s case, the annual revenue comparison for the last ten years pretty much looks like the textbook definition of success.
In 2010 Google’s annual turnover was 29.3 billion USD, which doubled in just four years, setting 2014 at $65.6 billion. In 2017 the revenue broke through the one-hundred-billion ceiling and set at $110.5 billion. And 2020, no matter how turbulent, brought the company $181.6 billion in revenue.
All of the above numbers are tightly linked to the popularity and success of Google Ads. Think about the amount of sponsored search results you see every time you research something. That’s pure money for Alphabet. The expert analysts say that as long as Google continues to achieve revenue growth at the same rate, Alphabet shares will remain a solid buy.
Now, looking a bit beyond the revenue is the profitability. Every company, even a tiny one, will have both the sources of income and the operating costs that need to be covered. So far, Google has been one of the most profitable companies across the map, since their income remains in a comfortable balance with the spendings.
However, some traders were concerned about the recent decline in Alphabet’s operating margin. But judging from the equity and invested capital returns, we can confidently say that the operation cost increase was a boost towards massive expansion and growth. At this point, Alphabet is still incredibly profitable, and the situation isn’t likely to change in the next couple of years.
Earnings Per Share (EPS)
Another crucial number to look at is the company's Earnings Per Share (EPS). When we divide the revenue by the number of dividend-earning shareholders, we can see how strongly the stakeholders might feel about continuing to keep their money in that instrument. For the most part, Alphabet’s EPS stayed very promising over the years with only one significant drawback in 2017.
The process that resulted in 2017’s EPS drop started in 2010 when the European Union has launched three independent antitrust investigations regarding Google’s violation of European competition laws. The general idea was that Google abused its power and left very little room for the local competitors to breathe and profit. Although Google strongly disagreed with the accusations and stated that their services and products helped the region’s economy, they were still charged with a $2.7 billion fine, approximately 2.5% of 2016’s revenue.
While the antitrust cases against tech companies are not exactly rare, Alphabet share price, in particular, doesn’t suffer from them a lot. In fact, apart from that 2017 misfortune, the EPS indications continue to go up, giving a sense of confidence to both the stakeholders and the retail traders.
Last but not least, cash flow is very important to consider when analyzing any tech stock, and Alphabet shares price is not an exception. By definition, cash flow focuses on the financial movements in and out of the company that essentially prove its legitimacy. Early on, when Google wasn’t actually producing a lot of physical products their cash streams were under very close surveillance.
Such close inspection was the aftermath of the early 2000’s dot-com bubble burst when the massive adaptation of digital services caused enormous levels of speculations on the stock market. But in that battlefield of bankruptcies, Google stayed strong, repeatedly showing healthy cash flow indications. And with the recent introductions of multiple subscription services, it is safe to say that the cash streams will most likely remain strong in the next few years.
Share price Alphabet trading tips
Just before we wrap up, let’s briefly go over a few handy tips for trading the Alphabet share price.
- Know your instrument. It is essential to have a clear understanding of how the price forms and evolves. To get a full grasp, make sure to study loads of various facts from the company’s history, including the reasons for notable price hikes and cuts.
- Consider other instruments. Even when you are trading the most profitable share on the market it is important to add a good deal of diversity to your trading portfolio. Diversification can both be a tool against high risks and a leverage to become a true trading pro.
- Keep your eyes open. The current situation can change at any moment and the best way to stay on top of things is to continuously find relevant news and try to predict the outcome. You might not always make the right decision, but as long as you are informed you will have more chances to succeed than those who trade based on their emotions.
Are Alphabet share CFDs a buy in 2021?
As you might have already figured by now, Alphabet share CFDs are absolutely a buy in 2021. Due to the promising technical factors and strong fundamental readings, we can conclude that Google still has plenty to show to the world and to its investors. So, let’s get ready to observe the next decade of Alphabet’s victories and find every possible way to benefit from them.