Alphabet trumps Apple as world's most valuable company
Google's parent company Alphabet overtook Apple as the most valued company after its strong quarterly earnings report surpassed expectations and sent its shares soaring by 6.4% in after-hours trading. Alphabet became the most traded company in the world, with its shares closing at US $820. Its valuation spiraled to US $550 billion, exceeding Apple (US $518 billion) at the end of the day.
Apple took over Microsoft's spot as the most valued company first in 2010, eventually losing out the spot to Exxon. In 2012, Apple reclaimed the number one spot from Exxon, beginning a 4-year run as the largest company by market value in the world. Google overtook Apple only a few times in the last decade, the last being for a short time in 2010.
In a reorganization plan, Google created a new holding company called Alphabet to act as a parent company to Google and its subsidiaries. The reorganization enabled the separation of its profitable search engine businesses (Search, Maps, Youtube, Android) from its other experimental ventures that are still to make money. It also paved the way for more transparent financial reporting, addressing investors' concerns.
Alphabet's portfolio includes Google, Calico (an anti-aging biotech firm), Nest (Internet-based home-appliances company), investment companies like Google Capital and incubator projects like Google-X, which is developing delivery drones and self-driving cars.
Alphabet's latest report on its fourth quarter results beat industry expectations with the company announcing a whopping 40% profit margin, driven by mobile and Youtube-based advertising It highlighted $19.1 billion in revenue from digital advertising, its primary revenue source, ~10% more than last year's revenue. The company reported a total profit of $4.9 billion, up from $ 4.7 billion last year.
In a first, the report separated earnings from Google (the search engine and Youtube) and Alphabet's experimental ventures, called 'Other Bets'. Financial details of the 'Other Bets' were disclosed for the first time, providing investors a sense of optimism after the company's past reluctance to share information about these ventures. Overall, the revenue of the 'Other Bets' grew, with a few ventures reporting losses.
After-hours trading takes place outside the regular opening hours of major exchanges. Though the lower trading volumes make it riskier than regular trading, its potential profits are often higher.