Why Google is a $1,900 Stock

Everyone uses Google to search the web. More than 90% of all internet searches are taken place over Google and its subsidiaries and there are 3.5 billion searches via Google per day. (Business Insider, 2018)As a result of Google’s frequent use by the consumer, the word “google” was added to the Oxford English Dictionary in June, 2006. It is this brand name that is world renown and as such should provide a compelling argument for a higher valuation.

Google’s Market Share of Internet Advertising

Digital ads are everywhere on the internet. It would be hard to browse the internet without coming across an ad or a pop-up window. As a result, companies are paying billions of dollars for this marketing and that number is expected to grow in the near future.According to a March, 2018 eMarketer study, Google’s 2018 market share of digital ad spending is forecasted to be 37.2% while the next biggest competitor is Facebook with a 19.6% estimated market share. Google’s market share in the digital ad market has slightly decreased since 2016 when it was 41.1%. However, total digital ad spending in 2018 is forecasted to grow 19% year over year to $107 billion. New competitors are entering the market and taking market share from Google (Amazon for example); however, Google’s revenue from digital ads will increase by a far greater amount than by the small amount that was lost due to a change in market share.

Ownership of Youtube

In November 2006, Google purchased Youtube for $1.6 billion. That acquisition has turned out to be a great purchase since Youtube is now one of the main places teens and adults turn to for social media. In a March, 2018 survey released by the Pew Research Center, it was discovered that the number of Americans using their computers or phones to access Youtube was 73% while Facebook was second at 68%. Similarly, in this same study, the percentage of teens ages 18-24 using Youtube was an outstanding 94% while Facebook trailed behind at 80%. (Social Media Use in 2018, 2018) These results indicate that Facebook is not the only dominant force in social media. In fact, Facebook has lost its market share leadership as seen in the categories mentioned above and in the Pew Research image below.