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Will Alphabet shareholders see upside from the spinoff of Sandbox?

By Sandra Helsel posted 06 Apr 2022

(Fool.com) “The M&A Show” on Motley Fool Live, recorded in late March included Motley Fool contributors Travis Hoium, Jason Hall, and Dan Caplinger. They discussed the recent news about Alphabet’s spinoff of Sandbox and secondly and what Alphabet’s strategy could be with this and future “other bets” spinoffs. IQT-News summarizes the comments below with a link to the video/audio. At the time of this discussion, panelists commented that little was known about whether, or how much, Alphabet will retain a stake in Sandbox.

Related: IQT San Diego announces that Jack Hidary, head of quantum and AI at Sandbox (Alphabet) to offer opening keynote for the May 10-12 conference and exhibition emphasizing the quantum enterprise

Panelist Dan Caplinger: The other thing being as you look at future 10-Ks, we’ll be able to kind of see does Alphabet maintain its proportional stake or does it allow itself to become gradually diluted, indicating perhaps less confidence in Sandbox’s being worthy of its full attention compared to the other deals it has under its corporate umbrella.
Panelist Jason Hall: I think it’s worth noting, too, that Alphabet is a nearly $1.9 trillion company so even Sandbox being a massive success and going public at a $20, $30, $40, $50 billion market cap, it’s a smaller per-share impact for Alphabet investors. I think that’s really the big takeaway there is to remember that’s become so big that some of these other bets have got to be enormously successful. And Alphabet should retain a pretty substantial ownership so that that per-share value carries over to shareholders.
Travis Hoium: Well, and it’ll be interesting to see how they play that from both a disclosure standpoint and then what they do with their shares, how they monetize it. Because I think it is wise in some wise for them to say, “Hey, we can afford to invest in a bunch of these other bets.” . . ..I think that’ll be really interesting dynamic to see long-term because they’ve got such a great core business, would they be better off just paying a dividend to shareholders or something like that?

Video commentary from Fool panelists can be accessed here.

Sandra K. Helsel, Ph.D. has been researching and reporting on frontier technologies since 1990.  She has her Ph.D. from the University of Arizona.

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