Unfortunately, it is not really possible to invest in YouTube's stock directly.
That is because Google now owns 100% of the company after acquiring YouTube for $1.65 billion in 2006.
However, you can get exposure to YouTube by investing in Google's parent Alphabet, Inc. |It is the company that owns Google, Gmail, Android, Google Cloud, Youtube, and many other properties.
The stock price of GOOGL is around $1,212 per share at the time of writing this, while the stock price of GOOG is at $1,216 per share.
If you wonder what the difference is between them, GOOGL (class A shares) contains voting rights, while GOOG (class C shares) has no voting rights.
Due to this, GOOGL is a better buy if it is either the same price or cheaper than GOOG.
YouTube is an online video-sharing platform. According to Alexa Internet, in October 2020, YouTube was the second most popular website globally, behind Google.
YouTube collects revenue from advertisements, and it had generated $15.15 billion in 2019. It is no shock or surprise that investors are therefore wondering how to purchase YouTube stock.
YouTube's mission is to give everyone a platform and show them to the world. Their core values have four essential freedoms: freedom of expression, information, opportunity, and belonging.
In October 2006, it had been announced that Google acquired YouTube for $1.65 billion in Google stock. By November 2006, Google and YouTube finalized the deal.
The public was allowed to test YouTube in May 2005. In December 2005, They officially launched the YouTube website. Nearly a year after Vimeo launched. Vimeo was the first online video-sharing platform to offer HD content to its users, but its growth was much slower than YouTube.
YouTube was already receiving 8 million views per day when it launched. By July 2006, about 65,000 new videos were uploaded daily, and the site was receiving more than 100 million video views per day. This number of views increased by more than 12 times in around seven months.
YouTube grew 36% in 2019, and it generated $15.15 billion in revenue in that fiscal year. It contributed roughly 9% to all Google revenue.
According to Alexa Internet, in October 2020, YouTube was the second most popular website globally, behind Google.
YouTube's ad revenue has been increasing over 30% per year, which is higher than Alphabet's total revenue growth of around 20% per year.
If you go by the revenue percentage, YouTube is now more than 9% of Alphabet's business, and this percentage is growing annually.
This number does not include the subscription revenue from YouTube Premium, YouTube Music, or YouTube TV. If these services had it, then YouTube's overall percentage of Alphabet's revenue would likely be well above 10%.
What You are Gaining by Investing in Alphabet
If you decide to invest in YouTube by buying stock in Alphabet, then you will also be investing in the following businesses:
- Google search: This is the world's biggest search engine with close to 90% market share globally (YouTube search is the second-biggest search engine in the world).
- Google cloud platform (GCP): Google Cloud is growing rapidly in the highly profitable cloud computing market despite being smaller than Amazon Web Services and Microsoft Azure.
- Android: The world's most influential mobile operating system.
- Google Play Store: Google's app store generates billions in revenue per year. It gets a percentage of the income for everything sold via the app store.
- Other applications that are popular among their categories like Google Maps, Google Chrome, Gmail.
- Alphabet Inc. also owns the self-driving car company Waymo, the health company Verily, the AI company DeepMind, plus has investments in most of the other high-tech businesses that could become a big success in the future.
In this way, investing in Alphabet is not just a way to gain exposure to YouTube. It can also be considered a diversified investment in online advertising, cloud computing, video streaming, artificial intelligence, and various other high-tech ventures.
The best method to learn investing is to get hands-on, real-life experience. There's absolutely no replacement for buying and selling your stocks.
Is YouTube Stock a Good Investment?
YouTube is a vastly successful business that gives investors exposure to digital and social video trends worldwide.
Let's look at some of the stats around YouTube to get a sense of whether it's a good investment or not:
- YouTube is the 2nd most popular site across the entire internet.
- YouTube is the 2nd most popular search engine, under Google.
- YouTube has about 2 billion monthly active consumers.
- There are more than 1 billion YouTube videos watched every day.
- Five hundred hours of video content is uploaded to YouTube every minute.
- 73% of U.S. adults and 77% of people within the age of 15–25 use YouTube
- 89% of YouTube viewers come from outside the U.S.
- 62% of businesses use YouTube as a channel to promote content
- 90% of people claim they discover new brands or products on YouTube
- Its algorithm determines 70% of what people watch on YouTube.
Besides, YouTube generated nearly $13 billion in revenue during the first nine months of 2020, which was up 24% compared to the same period in 2019.
Lastly, let's look at some of the reasons investors believe YouTube is an excellent investment for Alphabet (and for you):
- YouTube works around the network effect, meaning viewers, content creators, and advertisers encouraging each other to spend more time, money, and energy on the platform.
- YouTube has more viewers than any other video-based platform, which brings in more advertisers and even more content creators.
- YouTube has more content than any other video-based platform, which attracts more viewers.
- YouTube has more advertisers than any other platform, attracting more content creators who want to monetize their content.
- Google can earn through YouTube by selling video content, such as movie rentals or subscription services, directly to its users.
It is clear that YouTube is a powerhouse digital video company that could add growth to any portfolio.
Let us recap how you can purchase YouTube stock:
- YouTube is a sub-division of Google, which means it's only a division within a larger company and hence, does not trade independently on the stock market.
- Even though you cannot buy YouTube stock directly, you can purchase stock in YouTube's parent company, Alphabet (Google), which will let you own a part of YouTube.
- In 2015, Google renamed itself Alphabet and turned Google into a sub-division of Alphabet. It aimed to expand beyond just search and advertising and transform into a technology conglomerate.
- To invest in YouTube, purchase Alphabet stock by investing in either the GOOG or GOOGL shares. It does not matter which.
- With the recent rollout of fractional shares across the financial services industry, the share price doesn't matter much anymore.
- YouTube generated around $13 billion in revenue during the first nine months of 2020, which was up 24% compared to the same time in 2019.
- Alphabet is a widely successful company that has rewarded its shareholders pretty handsomely. If you do not mind owning a company that gets its revenue from digital ads, Alphabet can be a great way to invest in a tech conglomerate with broad exposure to cutting-edge business lines.
- YouTube is a massive platform in the social, video, and search space any way you look at it. It's one of the more popular sites on the internet and displays no signs of slowing down growth in its content, advertisers, or users.
- Buying stock in YouTube can become a profitable long-term investment. Since YouTube is a subsidiary of Google, which is a subsidiary of Alphabet, things get a little tricky.