Alphabet Rallies After Leadership Shuffle
December 04 2019 - 2:03PM
Dow Jones News
By Akane Otani
Alphabet Inc. shares are headed toward their best day in months
after the co-founders of Google unexpectedly stepped down from
active management.
Shares of the internet giant jumped 2% Wednesday, on track to
post their biggest one-day gain since Oct. 15.
Wednesday's rally extends the stock's gain for the year to 26%
but still leaves it well behind the gains of other technology
behemoths like Facebook Inc., Microsoft Corp. and Apple Inc. Those
three stocks are all up more than 45% in 2019.
A look at Alphabet's performance shows how worries about
regulatory scrutiny and increasing competition for online
advertising dollars have taken a toll on a stock that has had a
massive run over the course of the bull market.
Since Google completed its reorganization into holding company
Alphabet on Oct. 2, 2015, Alphabet's market value has more than
doubled to around $911 billion, according to FactSet. Shareholders
have been richly rewarded: The stock's price has nearly doubled
over that time, whereas the broader S&P 500 has risen 57%.
But the path upward hasn't always been smooth. Shares took a hit
earlier this year when regulators said they were launching an
antitrust investigation of Google. And while Alphabet's advertising
revenue for the third quarter rose to a record $33.9 billion, it
missed analysts' expectations.
That has allowed other large tech companies to pull ahead.
Amazon.com Inc. passed Alphabet in March 2018 to claim the title of
the second biggest U.S. company by market capitalization, behind
Apple. Then in May of that year, Microsoft, which has spent years
pumping up its cloud-computing business, surpassed Alphabet as
well. Today, both Apple and Microsoft have market caps of more than
$1 trillion, while Amazon has fallen to around $877 billion,
according to FactSet.
Will Alphabet's latest shake-up help the company charge ahead?
Sundar Pichai, Google's chief executive, will now have to manage
not just Google's search and advertising businesses but also
Alphabet's forays into areas like autonomous vehicles and smart
cities.
The stock's rally Wednesday suggests investors are pleased -- so
far.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
December 04, 2019 13:48 ET (18:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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