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Reaction Varied as Google Cuts Commission Take By TipRanks


© Reuters. Reaction Varied as Google Cuts Commission Take

Alphabet (NASDAQ:) has built an entire market around being the parent company of the leader in search capabilities.

The market was mixed on the latest Google move, which focuses on its App Store. Alphabet is a company that I find a little bearish. This actually places me in the contrarian group. (See Alphabet stock charts on TipRanks)

The latest news out of the company probably should have hit share prices harder than it did. It announced it would reduce the commission it paid for third-party sales of software in its cloud marketplace.

A whopping 20% commission was required for all sales. Once the fees structure is changed, it will be 3%.

Wall Street’s Take

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Wall Street consensus analysis calls Alphabet a Strong Buy, based on 28 Buys and one Hold assigned in the past three months.

The average Alphabet price target is $3,198.86, representing 18.8% upside potential

Government Targeting

Admittedly, Alphabet is a good investment. You can see why many analysts consider Alphabet a Buy. It is so diverse that you don’t know what to do with it. It is the largest search engine provider. Google has such a deep hand in advertising that all writers adapt to Google’s requirements.

Because it has streaming video, the company effectively owns YouTube and vlogging.

Alphabet is also at risk from being targeted by the government.

YouTube has recently made it clear that freedom of speech is an important value. Even though YouTube pulled several Russian videos belonging to political enemies of the current regime, this is still a significant statement.

Youtube personalities that have been flagged and taken down notices in other countries would find it difficult to support Alphabet’s free speech stance.

Calls for Alphabet — or more specifically, Google — to be treated like a public utility have been going on since the Trump administration. These calls are still being made in Ohio and other states. The company just won a fight against an EU antitrust fine that could cost it $5.1 billion.

It is smart to reduce the amount of cloud market sales. This will make it easier for companies to sell software through Alphabet. But, with all the other things happening, does this make it enough to keep Alphabet going?

Concluding Views

Alphabet is a highly diversified operation that should weather all but the worst storms well. That said, it’s also an extremely expensive stock — seven shares will buy a recent used car in many places — that’s been on an upward slope for months. Alphabet is also being targeted by government agencies for various reasons. The company is also perceived negatively by many users.

Although there is much to love about Alphabet’s services, many red flags indicate that it may not be the right company to take you to financial freedom.

Disclosure: Steve Anderson had no position at the time this article was published.

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