Google, commonly referred to by its corporate name Alphabet, is the fourth largest company in the world, measured by market capitalization. Known around the globe for its search engine and YouTube streaming platform, the company derives over 75% of its revenue from advertising. Still, it is also building its presence in cloud services, its fastest-growing business.
In this article, we’ll share tips for choosing a stock broker to buy Google stock, provide a step-by-step guide to help you make your first purchase, and highlight exchange-traded funds (ETFs) with high exposure to Google stock, delve deeper into the corporate structure of Google, and more!
How to buy Google stock
1. Choose a good stock broker
Since Google is one of the few companies boasting a market capitalization of over $1 trillion, you can choose from a myriad of brokers to help you make the purchase. That said, consider the terms offered by each broker and make sure the broker you end up picking works with residents of your country. Below we highlight four brokers which offer Google stock:
|Broker||Stock commission, US||Minimum Deposit||Available countries|
|eToro||$0||$10 (varies for different countries)||Worldwide – exceptions apply.|
|Interactive Brokers||Free for US investors. Up to $0.0035 per share with a minimum of $0.35 for international investors||$0||Worldwide – exceptions apply.|
|Trading 212||€/£0||€/£10||Worldwide. Not available in the USA and other countries.|
|Saxo Bank||$0.02 per share with a minimum of $10.00||$0 to $10,000 (varies between countries)||Worldwide. Not available in the USA and other countries.|
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your stock. All you have to do is find the share within your chosen broker and place a buy order. For this example, we will use eToro:
a) Search for the chosen stock (we will use Google Class A shares, ticker “GOOGL”):
b) Click “Trade”:
c) Choose the order details. Now, it’s time to choose how to invest:
- Amount: You choose the amount you want to invest in Apple instead of the number of shares. In this way, your investments may be fully or partially in fractional shares.
- Units: As opposed to “Amount,” here you define the number of shares you want to purchase (note: you can buy using either “Amount” or “Units,” up to you!)
- Leverage: You can choose the level of leverage. “X1” means no leverage (if it were “X2” or above, you would not be trading real stocks, but CFDs on Apple stock instead). That’s why you see “you are buying the underlying asset.”
- Stop Loss: Define the maximum you are willing to lose before closing your position automatically;
- Take profit: Define the profit amount that makes you close your position automatically (if reached).
Stop Loss and Take Profit are not guaranteed and trading with leverage involves high risk.
Only the “Amount” (or “Units”) and “Leverage” are mandatory fields.
d) Place the order: Finally, click “Open Trade,” and a new window will show up where it says “order filled,” your exposure, and lets you share your trade with other people.
ETFs – an alternative way to gain exposure
ETFs allow you to gain exposure to a dozen or even hundreds of companies with a single investment. ETFs can be a good option if you:
- Want to complement your Google position with similar companies;
- Want to limit your portfolio volatility (ETFs invest in many companies operating in different lines of business, limiting your exposure to idiosyncratic risks);
- Are interested in following a specific theme in your investments (technology stocks, advertising stocks, etc).
Some ETFs you may want to consider are:
- Communication Services Select Sector SPDR Fund (ticker XLC) tracks the Communication Services sector of the S&P 500. The ETF distributes dividends, and the expense ratio stands at 0.1%. The combined weight of Alphabet share class holdings is 26.09%.
- Invesco QQQ (ticker QQQ) is a broad technology ETF following the Nasdaq-100 index. The ETF distributes dividends, and the expense ratio stands at 0.2%. The combined weight of Alphabet share class holdings is 8.02%.
Google (Alphabet) overview
While Google and Alphabet are two names commonly used interchangeably to relate to the same company, it is worth noting that Google refers to only the search engine, while Alphabet is the name of the company (formerly known as Google) adopted in 2015 to highlight its other business areas such as cloud services. The takeaway is you can’t invest directly in Google’s search engine, only in its parent company, Alphabet.
The go-to place to find up-to-date information on the company is its investor relation section, available here.
Considering you are reading this article, you have already made up your mind to buy Google stock. But did you know there are three classes of Google (Alphabet) shares? They are:
- Class A shares (ticker GOOGL): 1 vote per share;
- Class B shares – not publicly traded: 10 votes per share;
- Class C shares (ticker GOOG): 0 votes per share;
Let’s start with what you cannot buy at the stock exchange – Class B shares. This class of shares, as per the latest annual report available here, is predominantly held by founders Larry Page and Sergey Brin. Class B shares each carry 10 votes in the annual meeting of shareholders and effectively allows Larry and Sergey to steer the company by controlling over 50% of the total votes.
Class A shares, trading under the ticker GOOGL, carry one vote per share, the standard practice in the corporate world. They should trade at a small premium to Class C shares, all else equal.
Class C shares, trading under the ticker GOOG, have no voting rights, which explains their small theoretical discount relative to Class A shares.
Except for the difference in allocated votes, all three share classes are identical in terms of profit participation and other rights. For practical purposes, buy whichever share is cheaper at a given moment in time.
Last but not least, always keep track of how Google’s competitors, such as Microsoft or Facebook, are doing. You may identify emerging trends relevant to Alphabet’s performance as well!
With the share class issue out of the way, we are ready to move to the next step – picking the right broker.
Google’s Financials and Performance
Once you have purchased Alphabet shares, it is a good idea to keep track of how the company and its competitors are doing. In doing so, you will get greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from the investor relation section (available here), there are specialized platforms to help you understand how Alphabet is doing from a financial perspective. One platform you can use is Koyfin – you can access Company overviews, Key statistics, Financials, Transcripts, and more!
For example, Koyfin allows you to get a quick handle on how the company’s revenues and margins (as measured by gross profit) are doing:
While such platforms cannot substitute your own research 100% of the time, they can be a very useful tool in the research process, saving you time and providing new investment ideas.