Are Investors Undervaluing YouTube? 🎥

Table of Contents

Are Investors Undervaluing YouTube?

There’s a sleeping giant out there receiving 2,800,000,000 user visits per month from people sinking 7,500,000,000 hours into platform content. We’re talking about YouTube, Alphabet’s asset. It must be worth a small fortune, but investors never talk about it!

YouTube grows revenue at 35% year-on-year pace from ads that elicit direct responses like gameplay and app installs, and coronavirus has investors excited that this revenue might be recurring.

The holy grail of any secular growth stock is recurring revenue because it’s sticky and carries a low marginal cost to generate. YouTube’s ad revenue will rise and fall with marketing budgets over time, but the user base is the key ingredient, and it looks there to stay.

According to Sandvine, the lockdown increased internet traffic to YouTube by 15.94%, more than Netflix, Facebook, Instagram, and Google. If the platform can build out its premium subscription business, the market might view it as less cyclical than it is now and start trading its parent at a higher multiple.

There are bears taking the other side, however, and they argue that another ‘adpocalypse’ could be on the horizon. This refers to brands pulling ads after content creator controversies on the platform. YouTube wrestles with control over its own community. Other apps cater to shorter attention spans like Twitter and Snapchat, are becoming easier to use, and are hosting a more rapid exchange of ideas.

There’s no doubt that if YouTube can reinvent itself and keep up with competitors, it has epic potential post-corona. The Invstr community looks forward to buying it when it’s broken and set free from Google, although there are no signs of antitrust just yet. It’s one to watch!

Share:
More Posts
Market Recap – September 28th 💰

After the 10-year Treasury yield bond fell off from its 15-year high, investors added some value back into the market, focusing all short-term attention on Friday’s PCE price index reading.

The Crude Oil Bust 🛢

Surging global crude oil prices, driven by factors like OPEC+ production cuts have pushed U.S. West Texas Intermediate futures to over $95 per barrel.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.