RiverPark is a fan of Alphabet Inc (NASDAQ:GOOG), which is the parent company of the world’s most popular search Google. In its Q1 Investor Letter, the fund presented its thoughts on the technology company. RiverPark is concerned about “increased governmental, user and advertiser scrutiny” faced by Alphabet’s core search and YouTube businesses, but the investor believes that “the risk/reward for Alphabet at current valuations is extremely attractive.” Let’s take a look at RiverPark’s comments about Alphabet.
While it is our belief that the portfolio remains in excellent position to continue to generate strong absolute and relative returns, it would be hard to argue that the near-term return potential for Facebook, and to a lesser extent Alphabet, is not a bit worse than we had previously expected.
Similar headwinds [that Facebook is facing] will likely also impact Alphabet as its core search and YouTube businesses are facing similarly increased governmental, user and advertiser scrutiny. As with Facebook, these headwinds are offset, by a business model that remain amongst the most impressive in our portfolio. Alphabet’s core ad revenue growth has ranged between 16-24% annually for 20 straight quarters (in its most recent quarter, gross ad revenue grew 22% to just over $27 billion), its EBITDA margin has hovered around 40% for nearly a decade and the company has nearly $100 billion of net cash on its balance sheet. Growth opportunities globally remain robust and the company’s Other Bets continue to move towards the potential for substantial incremental value creation. As with Facebook, while it may take several quarters for the current increased regulatory noise to abate, we believe the risk/reward for Alphabet at current valuations (about 15x our adjusted earnings estimate for next year) is extremely attractive.
Alphabet (GOOG) is one of the most popular stocks among hedge funds tracked by Insider Monkey. As of the end of 2017, there were 129 funds in our database with positions in the technology giant.
GOOG declined 0.27%, closing its last trading session at $1,120.87. Its opening price on the last trading day was $1,118.18. During the last 12 months, GOOG moved up 19.19%, while its year-to-date performance jumped 5.53%. The stock rose 7.95% over the past six months.