Alphabet ($GOOGL) — Break-Up — August 13, 2024
The Department of Justice is considering a break-up of Google. I think this is highly unlikely, but the probability of this actually occurring is rising a bit.
A strong argument can be made for the sum of the parts (Google Cloud, Search, YouTube, Waymo etc.) being worth more than $2 trillion as separate entities. It’s easy to argue that the cloud business and YouTube would likely get valuations in excess of 20x forward GAAP earnings. But at the same time, I think Google Cloud, Search and YouTube are so strong partially because they are together. The value creation from the bundling of these assets isn’t as apparent as with Microsoft, but the search king’s businesses undeniably support the traffic and monetization of each other (to some unknown degree). For this reason, I don’t think this would be a positive, like many others are arguing.
I’d have to see what the actual decision would be, but it’s possible that I’d exit this stake if a break-up occurs. Again, I don’t think this is likely.
