Google, a technology giant, is commemorating its 25th anniversary, yet in the eyes of Wall Street, it is perceived as being merely 19 years old, and to some extent, only eight years old.
Regardless of its chronological age, Google has yielded considerable cause for celebration among its investors. The company's stock currently trades at approximately 61 times the price it commanded during its initial public offering, coupled with an impressive 150-fold surge in profits.
Here is an overview of significant developments since the debut of Google's shares, a company that has become so ubiquitous that its name is more frequently utilized as a verb than as a noun. This noteworthy milestone occurred on August 19, 2004.
Google's journey to go public encountered its share of challenges. When the company initially disclosed the terms of its initial public offering, it intended to offer 24,636,659 shares to the public, comprising 14,142,135 shares from the company itself and 10,494,524 shares from selling stockholders.
The IPO had been projected to be priced between $108 and $135 per share. With a projected total of 268,519,643 outstanding shares post-IPO, this pricing range would have implied a market capitalization ranging from $29 billion to $36.3 billion.
However, Google's decision to go public coincided with a turbulent period on Wall Street. The Nasdaq Composite had experienced an 8.6% decline in the year leading up to the IPO, and the S&P 500 had lost 1.5%. Consequently, there was insufficient demand to sustain the initially proposed pricing.
Ultimately, only 19,605,052 shares were issued, as selling stockholders reduced their offering to 5,462,917 shares, and the IPO was priced at $85 per share, at the lower end of the expected range of $85 to $95 per share. Essentially, the IPO price was 30% below the midpoint of the initial projected range.
At the time of the IPO, with 271,219,643 shares outstanding, Google was valued at $23.05 billion. As of the close of trading on a recent Wednesday, its market capitalization had soared to $1.65 trillion.
From that point onward, Google's journey became markedly smoother. On August 19, 2004, the stock opened at a pre-split adjusted price of $100, representing an 18% premium over the IPO price. It briefly dipped to an intraday low of $96, a level it never revisited, before concluding the day at $100.43.
Since its initial public offering, Google has undergone two stock splits. The first, a 2-for-1 split on April 3, 2014, effectively halved the stock price from around $1,143 to approximately $572. The second split, a 20-for-1 division that took effect on July 18, 2022, reduced the price from over $2,235.60 to $111.78.
If we exclude the effects of these splits, the stock would have closed at roughly $5,221.60 on a recent Wednesday, or approximately 61 times the IPO price. On a pre-split adjusted basis, the stock's lowest closing point would be $100.11, registered on September 3, 2004, while its highest closing price would be $5,993.60, achieved on November 18, 2021.
Considering the stock splits, the company presently has a total of 12.6 billion Class A, Class B, and Class C shares outstanding as of July 18, 2023. This positions Google as the third most valuable company in the United States and one of only five firms boasting a market capitalization exceeding $1 trillion.
Although the Wall Street perception of the company places it at 19 years old, Google, in its current structure as Alphabet Inc., is just eight years old. The transition to Alphabet Inc. was announced after the closing bell on August 10, 2015. Since that transformation, the stock has appreciated by 294%, while the Nasdaq Composite has advanced 157%, and the S&P 500 has gained 103%.
Furthermore, Alphabet has diversified far beyond its roots as a mere internet search company. Its Services segment now encompasses Android, YouTube, Chrome, and Maps, while its Cloud division offers infrastructure and platform services alongside collaboration tools.
While the stock's ascent since its debut has been remarkable, it pales in comparison to the company's financial achievements. Google has consistently reported profitability since becoming a publicly traded entity, with its last annual loss occurring in 2000 when it incurred a $14.7 million deficit.
In 2004, the company generated a net income of $399.1 million from revenues of $3.19 billion. Fast forward to 2022, and Google's net income reached an astounding $59.97 billion on revenues totaling $282.84 billion. This represents a staggering 14,926% increase in net income and an 8,768% surge in revenue.
Despite its remarkable profit growth, Google has not paid out cash dividends but has engaged in significant share repurchases. During the first half of 2023 alone, the company expended $29.5 billion on repurchasing its stock, following a $59.3 billion expenditure on share buybacks in 2022.
Equally impressive has been Google's expansion in terms of its workforce. As of June 30, 2023, the company employed 181,798 individuals, marking a 7,332% increase from the 2,292 employees on its roster as of June 30, 2004.
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