GOOGL
💡 Alphabet made its largest acquisition ever, buying cybersecurity firm WiT for $32 billion, signaling a major push into cloud security.
☁️ WiT specializes in cloud security, serving competitors like AWS, Azure, and Oracle Cloud, which enhances Google Cloud’s competitive position.
📈 Despite a potentially high multiple paid, WiT’s rapid 100% sales growth suggests significant future value creation for Google, reminiscent of the YouTube acquisition.
@InvertirdesdeCero:
“Lucía asks, “How do you view Alphabet’s latest acquisition?” Very interesting question. A few weeks ago, Google made the largest acquisition in its history, buying WiT for $32 billion. It’s an acquisition of a cybersecurity company that Google had its eye on last year, attempting to buy it for $23 billion, but without success. WiT is a cybersecurity company focused 100% on the cloud segment. It’s a super powerful company within this sector and also serves Google Cloud’s competitors like Amazon Web Services, Microsoft Azure, and Oracle Cloud, which already used the solution and will continue to do so. With the limited information we have, it seems Google might have paid a high multiple for the company. However, looking at the sales, that multiple also reflects that this company is growing its sales at rates of 100%, achieving run-rate sales of about $500 million in just the last four years. These sales are expected to double again this year. Therefore, the price Google paid today is not as significant as the value this company will create for Google in the coming years and how much it will grow. Google was also heavily criticized when they bought YouTube a couple of years ago, and obviously, YouTube is now one of the best businesses in the world, valued the other day at around $500 billion. So, we have to trust Google. I think it’s a great company that has generated enormous historical ROI for its investors, and this probably won’t be a different situation.”
Watch the exact part of the video where @InvertirdesdeCero talks about Alphabet Inc. here:
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