Tuesday, August 11, 2015

Google Restructuring

Google's stock has picked up nearly 5% following news of the creation of Alphabet, a holdings company that Google will become Google's parent company. The creation of Alphabet allows Google to focus on its bread and butter business while allowing Alphabet to pursue outside ventures that were typically burdensome on Google's share price. The business will not be directly related to Google central products in the sense that assets like YouTube will not carry the "Alphabet" brand name. The purpose of the company is to alleviate the expenses that come with the pursuit of innovative ventures that Google so often partakes in - which historically has made investors uneasy. The stock has appreciated to reach a high for today of $674 but closed at $660 which reflects a daily increase of 4.27%. The move is highly received since one of the bigger drags on the stock has been Google's outside core-business ventures, with the weight of those businesses being funneled into a related holdings company, Google can put all hands on deck on building profits while still allowing tech executives the autonomy to chase projects that has stifled Google's stock's growth. The transition leads me to believe that Google is serious about enhancing shareholder wealth and is a welcomed sight in my opinion.

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