Unfortunately, it is not possible to invest in YouTube stock directly.
That’s because Google acquired YouTube for $1.65 billion in 2006 and now owns 100% of the company.
However, you can gain exposure to YouTube by investing in Google-parent Alphabet, Inc. This is the parent company that owns Google, YouTube, Gmail, Android, Google Cloud, and many other properties.
At the time of this writing, the stock price of GOOGL is $1,212 per share, while the stock price of GOOG is $1,216 per share.
If you’re wondering what the difference is between them, then GOOGL (class A shares) have voting rights, while GOOG (class C shares) have no voting rights.
Because of this, GOOGL is definitely a better buy if it is either the same price or cheaper than GOOG.
YouTube is big but still growing fast
YouTube dominates the online streaming video market with over 2 billion monthly active users. Despite its size, it shows no sign of slowing down and has been growing rapidly since it was acquired.
This data from Alphabet’s 2019 annual report shows how YouTube’s ad revenue has grown in the past three years, from 2017 to 2019:
|YouTube ad revenue||$8,150||$11,155||$15,149|
|– YouTube growth||–||36.87%||35.80%|
|– YouTube ads % of revenue||7.35%||8.15%||9.36%|
YouTube’s ad revenue has been growing over 30% per year, which is higher than Alphabet’s overall revenue growth of about 20% per year.
If you go by revenue percentage, YouTube is now over 9% of Alphabet’s business, but this percentage is growing each year.
This number does not include the subscription revenue from YouTube Premium, YouTube Music, or YouTube TV. If it were included, then YouTube’s overall percentage of Alphabet’s revenue would likely be well over 10%.
What you are getting by investing in Alphabet
If you choose to invest in YouTube by buying stock in Alphabet, then you will also be investing in the following businesses:
- Google search: This is the biggest search engine in the world with close to 90% market share globally (YouTube search is actually the world’s second-biggest search engine).
- Google cloud platform (GCP): Although smaller than Amazon Web Services and Microsoft Azure, Google Cloud is growing very fast in the highly profitable cloud computing market.
- Android: The world’s biggest mobile operating system.
- Google Play Store: Google’s app store makes billions in revenue per year. It gets a percentage of the revenue for everything sold through the app store.
- Other apps that dominate their categories like Gmail, Google Maps, Google Chrome.
- Alphabet also owns the self-driving car company Waymo, the health company Verily, the AI company DeepMind, plus investments in dozens of other high-tech businesses that could become very successful in the future.
In this way, investing in Alphabet isn’t just a way to get exposure to YouTube. It can be considered a diversified investment in online advertising, cloud computing, video streaming, artificial intelligence, and various other high-tech ventures.