Why $100bn YouTube is Google's Hidden Gem

Morningstar equity analysts expect YouTube revenue to grow to more than $29 billion by 2021, driven by increase in digital video ad demand and subscriber growth

Ali Mogharabi 6 October, 2017 | 8:24AM

YouTube logo

Morningstar equity analysts have taken an in-depth look at Google's YouTube, as we believe this business with a strong competitive advantage has been underappreciated by the market and may be a more important contributor to Google parent company Alphabet (GOOGL) and Google's strength than commonly believed.

While Alphabet does not provide much detail regarding YouTube or other businesses under Google, we looked at the total addressable digital ad market, along with potential streaming video subscribers, and estimate that the business could be worth up to $102 billion or 15% of Alphabet's overall market cap and 62 times more than the $1.65 billion Google paid for YouTube in 2006. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alphabet Inc A1,102.10 USD-5.15
Alphabet Inc Class C1,105.62 USD-4.92
Facebook Inc A159.60 USD-4.32
Twitter Inc23.32 USD-5.05

About Author

Ali Mogharabi  is an equity analyst for Morningstar

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