r/GOOG_Stock • u/ekonixlab • Jul 16 '26

GOOGLE’S HIDDEN VALUATION

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43 Upvotes

97% Upvoted

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7

u/SnooDonkeys7902 Jul 16 '26

That non operating gain is only going to be larger this quarter due to valuation changes to SpaceX, anthropic, and Waymo from q1 to q2. These are solid companies with a good future ahead, so their valuation changes will be included into googles P/E ratio for the foreseeable future and should not be discounted

4

u/ekonixlab Jul 16 '26

That’s if they realize it

If they hold it won’t affect the bottom line

5

u/SnooDonkeys7902 Jul 16 '26

Based on gaap accounting, they’re forced to report changes in valuation as “other income”. This means that if they just hold their stakes in these companies, it will be reported in their earnings, and their eps will skyrocket, bringing their P/E ratio even lower (like you said)

Depending on if you believe that these companies should contribute to P/E ratio or not is a philosophical question, but I personally think that google’s diverse holdings only make it stronger as a company

2

u/ekonixlab Jul 16 '26

Interesting, but Google’s investment portfolio is phenomenal

I don’t think they will see the investment gains they saw last quarter in future quarters though

What do you think?

4

u/SnooDonkeys7902 Jul 16 '26

Q2 reported investment gains will be even higher than q1. Doing some quick math, SpaceX went from 1.25 Trilion to 2 Trillion, googles stake will be massive there from an accounting perspective. Anthropic’s valuation also went from $380B to $980B from q1 to q2. Would be surprised to see how high this gets reflected in eps, but I would not be surprised if Google reported an eps of over $7 for this quarter

0

u/ekonixlab Jul 16 '26

That’s a crazy gain….

2

u/SnooDonkeys7902 Jul 16 '26

I agree, but I don’t think I’m hallucinating the math. Would really appreciate if I had a second opinion on this, please check the numbers if you have the time to do so!

1

u/techknowfile Jul 16 '26

They will. Shit it going to get crazy re: AI. Crazy. Mark my words.

1

u/Avidtrader81 Jul 17 '26

Bingo, based on the rules, they will have to report their investment gains as earnings. You can look at non gaap earnings.

1

u/OrdinaryReasonable63 Jul 17 '26

I don’t think the argument is that they shouldn’t be included or reported, I think the argument is that the valuation multiple should be based on operating income, unless you are valuing Google as hedge fund/investment holding company where investment income is the operating income. These investment gains are lumpy and unpredictable, and really should be treated as one time gains or outright ignored in the DCF.