Google Inc (GOOG) Fiber’s Raison D’être Really Exists

Consumers Won’t Be the Only Beneficiaries

Netflix, Inc. (NASDAQ:NFLX) is another company that is benefiting from Google Inc (NASDAQ:GOOG) Fiber. Netflix, Inc. (NASDAQ:NFLX) pushes a substantial amount of video content through the world’s networks, and slow download speeds hurt the company. Google Fiber has helped to push Verizon to improve its offerings, thus make fast Internet more accessible and making Netflix a better deal.

Netflix’s journey into original programming has been very successful, and a number of its programs have earned Emmy nominations. With that being said, Netflix is too expensive. It is trading at a P/E ratio around 300. Its one-year revenue growth rate of 12.6% shows clear signs of deceleration, relative to its five-year revenue growth rate of 25.5%. Netflix, Inc. (NASDAQ:NFLX) has a positive long term trajectory and Google Fiber will benefit the company, but falling growth and high valuations make it a poor investment right now.

Conclusion

Google Fiber shouldn’t be dismissed as a quirky, one-off experiment. Google Inc (NASDAQ:GOOG) needs to grow its profits, and a public fiber optic network is only a short step away from its current offerings. Google Fiber is only available in a few locations right now, but its future keeps expanding. For investors looking to buy innovation, Verizon is a second rate investment. Compared to Google Fiber it offers lower speeds and higher prices. Verizon is another innovator to keep your eye one, but only once its valuation comes down.

The article Google Fiber’s Raison D’être Really Exists originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Google and Netflix. The Motley Fool owns shares of Google and Netflix. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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