YouTube is the world’s leading video-sharing platform, boasting an incredible 2.5 billion monthly active users in 2024.
While many investors have considered the idea of investing directly in YouTube, the platform has never had an IPO. However, there is a way to gain investment exposure to YouTube—through its parent company, Alphabet Inc. (NASDAQ: GOOGL), which acquired YouTube in 2006.
This article explores YouTube’s history and examines its critical role within Alphabet’s overall business model.
Key highlights:
- With 2.5 billion monthly active users in 2024, YouTube remains the world’s second-largest social media platform, only behind Facebook.
- YouTube was acquired by Google (now Alphabet Inc.) in 2006 for $1.65 billion. Investors can gain exposure to YouTube by purchasing Alphabet’s NASDAQ-listed shares (GOOGL).
- YouTube has never been a publicly traded company, and Alphabet has no current plans to announce an IPO due to YouTube’s integral role in its advertising-driven business model.
The History of YouTube
YouTube was founded by three former PayPal employees after the idea for a video-sharing platform was discussed during a dinner party in San Francisco. Chad Hurley, Steve Chen, and Jawed Karim had noticed the difficulty of sharing video content on the internet and came up with the idea for YouTube after Janet Jackson’s wardrobe malfunction at the Superbowl and the Indian Ocean tsunami in 2004.
The original YouTube homepage was vastly different from today, but key features like “Featured Videos” and a tag system were already implemented.
YouTube launched in 2005, with founder Karim posting the first-ever video to the platform in March of that year. By September, a Nike advert that featured the 2005 Balon d’Or winner, Ronaldinho, had become the first video to hit 1 million views on YouTube.
Sequoia Capital had initially invested $3.5 million into YouTube during its beta phase. The company later decided to increase their investment in the platform by a further $8 million, taking the total invested to $11.5 million in 2005. The capital invested by Sequoia helped YouTube to acquire the YouTube.com domain and expand its server capacity after its early successes.
In 2006, Google (now Alphabet Inc.) bought YouTube for $1.65 billion. Eric Schmidt, CEO of Google at the time, stated that YouTube represents “the natural next step in the evolution of the internet,” and a Wall Street analyst commented on the conviction of Google during the acquisition, saying that Google is “very, very bullish about the future of online video.”
YouTube gradually integrated some minor improvements to the user experience over time, but the bulk of the site has largely remained unchanged from its beta version. One of the most notable additions to YouTube since Google’s takeover, however, was the introduction of a creator payment system that rewarded creators for posting videos that supported Google Ads.
From 2007 onwards, supported YouTube videos have paid royalties to creators according to the number of views they get. This has opened the door for a new wave of content creators to earn a living while posting on the platform, with one of the earliest success stories being the family of Charlie, who bit his brother’s finger, and one of the latest being Mr. Beast, who has accumulated billions of views on the platform in recent years.
As of 2024, YouTube is the 2nd biggest social media platform, boasting an impressive 2.5 billion monthly users, only beaten by Facebook, which has 3.1 billion monthly users.
The number of monthly YouTube users slightly dropped in 2024, but it still remains one of the most dominant social media platforms. (Source: Data Reportal)
Will there be a YouTube IPO?
As things stand, there are no plans for a YouTube IPO date to be announced. YouTube has become integral to Google’s business model due to its in-built advertising services. This element of the business model also enables YouTube to pay its content creators, which has become a major component of YouTube’s expansion in recent years.
Due to YouTube’s importance within the Google company structure, it seems unlikely that a YouTube IPO date will be announced anytime soon.
How to invest in YouTube?
YouTube is not a publicly traded company, and there has never been a YouTube IPO. Instead, YouTube was founded as a venture-backed entity following an $11.5 million investment from Sequoia Capital in 2005.
YouTube was then acquired by Google in 2006 at a $1.65 billion valuation. As a result, the best way to gain exposure to YouTube is by investing in its parent company, Alphabet Inc., which can be found on the NASDAQ stock exchange under the ticker symbol, GOOGL.
GOOGL has risen 23.45% YTD, reaching an all-time high of $191.52 in July 2024. With its current price of $174.20, its market capitalization is $2.12 trillion, making it one of the biggest companies in the world.
How to invest in YouTube FAQs
Is YouTube on the stock market?
YouTube is not available on the stock market, but its parent company, Google, is. Since 2015, the official company name for Google has been Alphabet Inc., and it trades under the ticker symbol GOOGL on NASDAQ.
Who owns YouTube now?
YouTube is owned by Alphabet Inc., which was created during a restructuring of Google in 2015.
Can you invest in YouTube stock?
Since there has never been a YouTube IPO date set, there is currently no way to invest in YouTube stock directly. YouTube was purchased by Google in 2006, however, which means that the next best alternative is to buy GOOGL shares on the NASDAQ stock exchange.
When is the YouTube IPO date?
As things stand, Google has no plans to announce a YouTube IPO date. The company has become integral to the Google business model, as it enables advertisers to access a much broader base of users than can be found on Google’s search engine alone.
Due to the importance of YouTube within the Google company structure, there may never be a YouTube IPO date. However, Alphabet Inc. retains full ownership over YouTube and may decide to launch a YouTube IPO if it decides to in the future.
The bottom line
After being described as “the next evolution of the internet” back in 2006, YouTube has become a prominent platform in the world of online media sharing. Google’s acquisition of YouTube in 2006 enabled the company to offer targeted advertising services to a much broader number of people around the world, with YouTube supporting over 2.7 billion active users on a monthly basis.
Despite there having never been a YouTube IPO date, it is still possible to gain investment exposure through its parent company. Alphabet Inc. trades under the GOOGL ticker symbol on the NASDAQ and represents the G in the FAANG acronym that has become synonymous with tech dominance in the 21st century.
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