Google Inc (NASDAQ:GOOG) is having a good year so far. The company is set to launch its first real hardware line, in the form of Google Glass, later this year and shares have risen by close to 20 percent since the year started. A new report from Barclays PLC (NYSE:BCS) (LON:BARC) highlights one of the firm’s older projects, YouTube, and attempts to put a value on the service.
Google Inc (GOOG)’s Investment In YouTube
YouTube and Google Inc (NASDAQ:GOOG) are so intricately connected at this stage that it can be forgotten they used to be separate entities. In 2006, Google Inc (NASDAQ:GOOG) paid $1.65 billion for the video sharing site. According to the mathematics of the Barclays PLC (NYSE:BCS) analysts, that was one of the best investments in recent history.
Since November of 2006, when Google Inc (NASDAQ:GOOG) paid what was then considered an absurd price for YouTube, shares in the Mountain View California company have risen by 83 percent. According to the Barclays estimation, in the same period the value of YouTube has risen to between $15.6 and $21.3 billion. At the higher end that’s a value increase of 1290 percent, on the lower end it’s 945 percent.
YouTube was clearly a good buy for Google Inc (NASDAQ:GOOG), and the analysts take their work further. According to their estimates, YouTube will bring in $3.6 and $4.3 billion in revenue in 2013 and 2014 respectively. The video sharing site is still growing, and its one of the most valuable assets that Google Inc (NASDAQ:GOOG) has.
The value placed on the site by the analysts means that it is worth between $46 and $63 per Google Inc (NASDAQ:GOOG) share. Shares in the company currently trade at around $840. Youtube is one of the fastest growing businesses that Google Inc (NASDAQ:GOOG) has, however, so don’t expect to see the site sold any time soon.
Youtube business is too intricately tied with Google to attempt a sale in any case. There would need to be a long period for the company’s to disentangle their respective advertising deals and platforms, and the teams behind them. Youtube is so important to Google Inc (NASDAQ:GOOG) business, however, that divesting itself of the video sharing site seems an impossibility in the medium term.
Google Inc (NASDAQ:GOOG) search revenue is in a tough cycle right now because of the drop in usage of desktops to access the internet. Mobile is a difficult platform to advertise on, but Google is, as always, innovating in the area. Youtube is a Google stalwart and worth every penny of $20 billion.