Why Alphabet's Sum-of-Parts Valuation Exceeds Its Market Cap, But a Breakup Remains Unlikely
By
M.G. Siegler
A five-star bake. Worth schmearing, sharing, saving.
Summary
This article analyzes the argument that Alphabet (Google's parent company) might be worth more if broken up into separate entities, as proposed by analyst Gil Luria and discussed by David Streitfeld. The article examines the case for a breakup, comparing it to antitrust pressure from the DOJ, but ultimately concludes that a breakup is unlikely. It explores the valuation gap between Alphabet's current market cap and the potential sum-of-parts value of its various businesses (Search, YouTube, Cloud, Waymo, etc.), while arguing that the synergies between these units are what make Google powerful.
Key quotes
· 4 pulledIs Google going to break itself up? David Streitfeld posed the question earlier this week in a column for The New York Times, riffing on a research report by Gil Luria for the investment firm D.A. Davidson that made the case.
To answer the question: no, Google is not going to break itself up. But that doesn't mean there aren't a few compelling ideas buried in the provocation...
Actually, Streitfeld and Luria are sort of arguing for different things – or at least, different reasons for the same proposed outcome.
Streitfeld wonders if Google might be wise to preemptively break themselves
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