How To Buy Google/Alphabet (GOOGL) Stocks & Shares

Update 7 July 2022: Alphabet Plans 20:1 Stock Split After Shareholder Green Light

After gaining shareholder approval at its annual general meeting in June, Alphabet – parent of the Google brand – is planning to conduct a 20:1 stock split of its shares, after trading on Friday 15 July 2022.

From that date, each shareholder will own 20 shares for each single share they held in the NASDAQ-listed company prior to the split.

Having increased in value nearly 40 times since the company went public in 2004, Alphabet is splitting its stock to make its shares more accessible/affordable to retail investors – a vital source of capital.

Alphabet shares closed on Wednesday 6 July at £1,909 ($2,291). If they remained at the same price between now and the close of trading next Friday, each of the new shares would be worth a shade over £95 ($114).

Although each share is worth less once a split has taken place, investors don’t lose out as their overall shareholding is worth the same as before the move.

Research from Bank of America suggests stock splits have historically been positive for companies that complete them, as they tend to outperform the wider market in the 12 months after a split takes place.

27 April: Shares in Alphabet, Google’s parent company, fell yesterday in April after the giant tech company reported weaker-than-expected first quarter earnings and revenue figures.

Alphabet’s profits plunged £1.15 billion ($1.5 billion) in the first quarter compared with 2021, as weak results from the company’s YouTube division highlighted slowing momentum in online advertising.

Alphabet reported a 23% increase in revenue to £52 billion ($68 billion) in the three months to March this year, slightly below forecasts. This compared with a 34% increase in revenues over the same period in 2021.

Alphabet’s share price has dropped by about 20% since the start of this year. Steepling inflation, ongoing post-pandemic supply chain disruption and the conflict in Ukraine are forcing advertisers to review their spending plans. 

As well as Google, California-based Alphabet owns the Android smartphone operating system along with video platform YouTube. The company makes more money from digital advertising than any other business.

Ruth Porat, chief financial officer of Alphabet and Google, said: “We are pleased with Q1 revenue growth of 23% year over year. We continue to make considered investments in capital expenditure, research & development and talent to support long-term value creation for all stakeholders.”

Here’s what you need to know about buying and selling Alphabet shares.

Note: investing in companies comes with no guarantees. When buying company shares, it’s possible to lose some, and very occasionally all, of your money.

That said, over the long term – and by this we mean a bare minimum of five years (and preferably much longer) – chosen wisely, it’s possible for shares-based investments to produce far superior returns to those available from, say, ultra-safe, low interest-paying deposit accounts. Especially once inflation has been factored in.

Why own shares?

Before buying shares in any company ask yourself why you’re taking that decision. Does the company have great future prospects with a share price that could go from strength-to-strength?

Or is there takeover talk in the offing that could potentially drive up a company’s share price? Maybe the company you’ve identified is on a recovery mission and its share price is starting to recover from previous lows.

How to buy shares

There are several steps to take once you’ve satisfied yourself about the reasons for buying shares in a particular company.

1) Open an account

Whether you’re a seasoned share trader, or someone who is brand new to stock market-based investments, if you want to buy shares in Alphabet, you’ll need to open an account with a regulated brokerage.

Stockbroking is a competitive market place and services for DIY investors come in a range of guises – from online investing platforms run by some of the biggest names in financial services, to investment trading apps that work off your smartphone or tablet.

Before opening an account, bear in mind the following:

• Keep your ultimate financial goals in mind
• Be prepared to ride out stock market ups and downs
• Aim to keep trading costs to a minimum
• Remember that share investing can prompt tax charges, for example, when selling part of your portfolio.

And before buying any shares ask yourself these questions:

• Should I take financial advice?
• Am I comfortable with the level of risk in question?
• What’s my investing budget?
• Can I afford to lose money?
• Do I understand the company in which I’m looking to invest?
• Am I protected if my platform provider/adviser goes out of business?

2) Where is Alphabet traded?

The ticker symbol for Alphabet is GOOGL and the company is traded on the Nasdaq market in the US. Nasdaq’s trading hours are 2.30pm – 9pm (UK time) Monday to Friday.  

You should be able to buy US shares through most brokerage accounts. Buying shares in US dollars incurs a foreign exchange fee (typically around 1%) unless you fund the purchase from a US dollar account. 

Most brokerages also charge a slightly higher transaction fee for buying US, rather than UK, shares although it’s worth comparing the fees charged by different brokers if you plan to trade US shares regularly.

You will be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk. If the pound strengthens against the dollar, your shares will be worth less in sterling (and vice versa).

As with UK shares, any profit on US shares will be subject to Capital Gains Tax, unless you hold the shares in an Individual Savings Account or Self-Invested Personal Pension.

3) Do your research

To find out more about Alphabet, go online and visit the company’s investor relations page.

4) What’s your investing strategy?

People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts over time.

The latter method is often referred to as a means of ‘pound cost averaging’, a stock market hack which may help you pay less per share on average over time. Rather than waiting to build up a lump sum, it means an investor’s money is being put to use in the market straightaway.

5) Place an order

Once you’re ready to buy shares in Alphabet, log in to your investing account or trading app. Type in the ticker symbol GOOGL and the number of shares you want to buy, or the amount of money you’re prepared to invest.

6) Review Alphabet’s performance

Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you review how each component is performing on a regular basis: monthly, quarterly, or annually.

Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required – to maintain the status quo, buy more stock, or sell existing shares.

How to sell shares

If you’re pleased with the performance of your shares and want to take a profit, you’ll want to sell your holdings. To do so, log in to your investing platform, type in the ticker symbol and select the amount that you want to sell.

Note that if you’ve made a substantial profit, you may be liable to pay Capital Gains Tax (CGT) when you come to sell your holdings, especially if your shares were held outside of a tax-exempt wrapper such as an Individual Savings Account.

The CGT tax-free allowance for the tax year 2022-23 is £12,300. Find out more here about CGT, rates and allowances. 

How to invest in Alphabet via a fund

Investing directly in individual stocks can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.

Investing directly in individual companies can, however, leave you vulnerable to stock market volatility and unforeseen swings in share prices. That’s why, financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold hundreds, if not thousands, of company shares.

Being a major component of the Nasdaq index, Alphabet is found in many funds incorporating a bias towards the US.