equitieswatch
Sunday, January 29, 2023
About us
Advertise
  • Home
  • Stock Market
  • Finance
  • Cryptocurrency
  • Commodities
No Result
View All Result
Equitieswatch.com
No Result
View All Result

Opinion: Google’s earnings should be a warning to investors in Facebook and other online-ad companies

by equitieswatch
April 27, 2022
in Finance

Google’s earnings shortfall is an indication of trouble across the online-advertising industry, and should scare investors in Facebook and other competitors.

Google parent company Alphabet Inc.
GOOGL,
-3.59%

GOOG,
-3.04%

reported first-quarter results Tuesday that were slightly shy of Wall Street estimates, with revenue at Google and YouTube both hit by the war in Ukraine and slower ad spending. The numbers weren’t the only problem, though: Wall Street analysts seemed especially disappointed in comments by Alphabet Chief Financial Officer Ruth Porat about a potentially slower second quarter and slowing revenue growth at YouTube.

Many analyst questions were around YouTube’s slowing growth rate, and whether or not the company was seeing more competition from TikTok. In the first quarter, YouTube revenue grew 14.39% to $6.9 billion, its slowest growth in the past five quarters. In the year-ago quarter, for example, YouTube revenue soared 48.7%.

Porat blamed Russia’s invasion of Ukraine; like many U.S. corporations, Alphabet suspended its business in Russia after it went to war with Ukraine. The loss of revenue from Russia was about a 1% hit on its overall revenue, executives disclosed.

“The war, that did have an outsized impact on YouTube ads relative to the rest of Google,” Porat said. “And that was both from suspending the vast majority of our commercial activities in Russia as well, as I noted earlier, the related reduction in spend primarily by brand advertisers in Europe.”

Analysts weren’t buying that explanation, sticking to questions about the rise of TikTok. One analyst said he has been hearing concerns about more competition from TikTok affecting YouTube’s mobile usage.

“We’ve seen significant investment in online video and there has been a ton of innovation, but there are 2 billion-plus logged-in viewers who visit YouTube every single month and more people are creating content on YouTube than we have ever seen before,” Alphabet Chief Executive Sundar Pichai rebutted.

In addition to YouTube, concerns about the general macroeconomic advertising environment and the outlook spooked some analysts. Porat said that in Google Services, the revenue growth rates in its advertising businesses benefited from lapping the COVID-related weakness in 2020.

“Obviously we will not have that tailwind for the rest of this year,” she said. “As discussed in prior calls, the largest impact from COVID on our results was in the second quarter of 2020, which means that in the second quarter of 2022, we will face a particularly difficult comp as we lap the recovery we had in the second quarter of 2021.”

Wall Street had been expecting Alphabet to weather the storm in the online-ads sector, where Apple Inc.’s
AAPL,
-3.73%

privacy changes to iOS have had a big impact on Facebook parent Meta Platforms Inc.
FB,
-3.23%

and other ad-based companies. Comments about its Google ad and search business are likely indicators that other internet companies could report even more disappointing results in the coming weeks, starting with Facebook on Wednesday.

In after-hours trading Tuesday, shares of Alphabet fell 4% at one point, though a major increase to its stock buyback plan — to $70 billion, up from $50 billion last year — likely helped its shares stave off much more damage, ending the session down 2.7%. Meta, which saw its stock dip nearly as much in Tuesday’s after-hours session, may not be so lucky.

If Alphabet is no longer a port in the storm, investors are going to have a tough time finding a better alternative among its few competitors.

Source link

YOU MAY ALSO LIKE

The U.S. is hurtling toward a recession. Here’s the best-case scenario for how it could play out—and the worst

Bitcoin Breaches $20,000 for the First Time Since 2020

ShareTweetPin

Search

No Result
View All Result

Recent News

Oil slips further on demand, financial market worries By Reuters

Oil Sinks Further Amid China Concerns, Weakened Economic Prospects By Investing.com

October 25, 2022
Gold Up, Set for Second Weekly Gain as Dollar Falls from 20-Year High By Investing.com

Gold Pressured Near $1,650, Copper Muted on Economic Fears By Investing.com

October 25, 2022
Explainer-What would be the impact of Russian oil sanctions in Europe? By Reuters

Oil prices edge higher as U.S. dollar eases By Reuters

October 25, 2022
Equitieswatch.com

Equitieswatch.com is your Stock Market, Finance, Forex, Cryptocurrency, Business, NFT News Website. We provide you with the latest breaking news and videos straight from the Business industry.

  • Home
  • About us
  • Contact
  • Privacy Policy

© 2022 www.equitieswatch.com

No Result
View All Result
  • Home
  • Stock Market
  • Finance
  • Cryptocurrency
  • Commodities

© 2022 www.equitieswatch.com