Sometimes, a company will look to unlock value by spinning off part of its business. That may prove a more logical approach, particularly for a company that has built a diverse number of business segments.
Part of that move could also be driven by regulators. The U.S. government broke up Standard Oil into seven different oil-related companies, many of which have survived and grown to this day. Ditto with telecom companies, which survived the breakup of Ma Bell, aka AT&T (T).
Today, federal regulators are eyeing a breakup of Google (GOOG). Their proposed solution is to break up the company by spinning off the Chrome browser.
Whether in whole or in part, Google is likely worth far more than its current market cap and stock price would suggest. Google continues to dominate in the search engine space, and is unlikely to lose that dominance by spinning off part of its business.
Google remains an industry leader, whether in its current whole or in parts.
Action to take: Google looks reasonably valued relative among the big-cap tech players, and breakup fears have made the stock worth picking up at today’s prices.
At current prices, Google also pays a 0.5% dividend.
For traders, the March 2025 $180 calls, last trading for about $4.70 could see mid-to-high double-digit returns before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.