Key Points:
- Google went public 19 years ago at a valuation of $23 billion.
- The decision to go public was influenced by U.S. securities laws requiring companies with over 500 shareholders to publicly report financials.
- Eric Schmidt, former CEO, didn’t initially plan on taking Google public.
- Google’s IPO announcement was a surprise, coming three hours ahead of a speculated deadline.
- Challenges faced: negative press, interview violation during the SEC’s “quiet period”, and setting the share price.
- IPO opened at $85/share, with close price just over $100.
- Google’s offerings in 2004 were limited compared to its diverse product range today.
- Two stock splits since 2004; investment then would see a significant return now.
- Google’s valuation now approaches two trillion dollars.
Known predominantly for its groundbreaking search engine, Google has diversified into various hardware and software sectors. Yet, its most defining moment remains the unexpected decision to go public on August 19, 2004, marking its transformation into the tech giant it is now.
Interestingly, it wasn’t Google’s primary intention to become a publicly traded entity in August 2004. U.S. securities regulations at that time mandated companies with over 500 shareholders to disclose financial statements by year-end. But, this didn’t necessarily imply public stock selling.
By early 2004, Google found itself at this crossroad. The options available were: buying back shares to reduce shareholder count, revealing financial statements without a public stock offering, or going public in the typical sense. During this contemplation period, Google stopped all media communications.
The world was taken aback when, at 11AM on April 29, 2004, Google declared its public intentions, ahead of expected timelines. This declaration was accompanied by a candid “Letter from the Founders” by Larry Page and Sergey Brin, hinting at Google’s unorthodox business approaches.
Google then collaborated with the U.S. Securities and Exchange Commission to refine its IPO strategy. However, an unforeseen challenge arose: an interview featuring the founders in Playboy magazine, seemingly breaching the SEC’s pre-IPO “quiet period”. Thankfully, Google’s adept legal team found a solution.
When the IPO was finally initiated in August 2004, Google’s self-assessment valued its shares between $106 and $135. But, facing negative media coverage, Wall Street skepticism, and SEC issues, the initial bids were on the lower side. After board consultations, a debut share price of $85, with a $23 billion valuation, was settled.
The market response on August 19 was overwhelming. Shares opened at $85 and soon exceeded $100. Within days, they touched $110. The IPO’s success was evident, showcasing the public’s trust in Google. It’s noteworthy that this was before Google introduced staples like YouTube, Chrome, Android, and many others. Their subsequent ventures into hardware and consistent innovative streak further solidified their market presence.
Post-IPO, Google experienced two stock splits and underwent a restructuring into Alphabet. According to Admiral Markets, an initial $1,000 investment in Google would be valued around $64,000 now, showcasing a remarkable ROI.
From its $23 billion valuation at IPO to nearing a two trillion-dollar market cap now, Google’s ascent is monumental. The fact that its public transition was more out of obligation than choice makes the journey more remarkable. As the company continues to innovate, it’s exciting to envision where Google might be in the coming years.