YouTube gambles big on Google stock

What goes up, most come down: Even Google’s stock price!In “Google buys YouTube on the ‘cheap’: $1.
Written by Donna Bogatin, Contributor

What goes up, most come down: Even Google’s stock price!

In “Google buys YouTube on the ‘cheap’: $1.65 billion in Google stock” I discuss Google’s crafty all-stock YouTube acquisition structure:

Google’s mastery at financially savvy, shrewd strategic transactions continues apace: Google is acquiring YouTube for $1.65 billion in a stock-for-stock transaction.

Google proudly noted during the joint YouTube-Google conference call that the non-cash deal “made it cheaper for us.” YouTube shareholders also benefit from a “tax-free transaction,” Google said...

What will the impact of the stock-for-stock deal be on Google’s financial position? Not much. Google says the transaction will be only “slightly dilutive.” 

Google also noted that YouTube shareholder returns will move in tandem with the Google stock: 

We’re also pleased that the YouTube shareholders want to become shareholders of Google and participate with the rest of us. 


Google’s Q3 earnings report is due out next week and Google well undoubtedly inspire another round of hearty congratulations from Wall Street analysts (see “Wall Street to Google: Congratulations).


The Google magic, however, can not provide an indefinite shield against any number of known and unforeseen risks that may spark a sharp decline in its stock price: click fraud, copyright, ad price inflation, privacy… 

The giddy YouTube founders “Chad and Steve” will not be laughing like school boys in a YouTube video if (when) that day comes.


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