Google (GOOGL) Stock Surges Almost 10 Percent in Q2 2019 Earnings
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Google (GOOGL) Stock Surges Almost 10 Percent in Q2 2019 Earnings
On Thursday the 25th of July, Alphabet’s (GOOGL) second-quarter earnings report was officially published by the firm. The report showed a $38.9 billion revenue which was about $800 million higher than average expectations from analysts, who predicted $38.1 billion.
Furthermore, analysts predicted about $11.30 as earning per share and this was also surpassed as the Q2 figure came in at $14.21. The report also showed progress with advertising which is credited for pushing the Alphabet’s stock past $96, representing an 8.5 percent increase in after-hours trading.
Advertising Specifics
Total revenue for advertising in the second quarter grew from $28 billion and increased by 16 percent to hit $32.6 billion. GOOGL investors reportedly projected a higher increase – up to 20 percent – but the current figures seem to be well accepted. The figure also seemed to show that there was indeed light at the end of the revenue growth tunnel which didn’t seem to shine so bright in previous quarters.
For paid clicks, revenue increased by 28 percent when compared with the same period last year but seemed to signify a general comparative drop. This, according to some analysts, means that there might be a growing chance that advertisers who regularly use Google’s platform might be increasingly discontented with the value being received.
Traffic Acquisition Costs
According to the reports, the amount used to gather traffic or attract partner websites, saw an increase but was still a little lower than expected. Analysts had forecasted that Traffic Acquisition Costs (TAC) would hit $7.27 billion but was a little off as it increased by 13 percent but only hit $7.24 billion.
Google’s TAC history has been increasing recently as there is now a higher dependence on third-party apps and its various partner sites. Google is focusing on this as a major way to improve its mobile advertising revenue.
Worthy of note here is Google Properties. The revenue from its ads and other services including divisions like Gmail, YouTube and Google Play surged by 18% and hit $27.34 billion. This outdid an estimate of $27.14 billion.
Some Legal Trouble
The Federal Trade Commission has officially opened an investigation that accuses Google of some antitrust breaches regarding its advertising. There is also a near-future plan for the Department of Justice to begin a probe of major tech giants, Alphabet being one of the foremost.
During the last quarter, the European Union fined Alphabet a sum of $1.7 billion because the tech giant had allegedly prevented fair opposition in the region’s interactive ad sphere.
Analysts generally feel that Google may be quite overvalued. Some figures put this overvaluation at between 50 and 70 percent. It is also said that the current overall market is at its third most expensive period in all of market history.
These two points might seem unconnected but could there be any correlation?
Google (GOOGL) Stock Surges Almost 10 Percent in Q2 2019 Earnings
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Tolu Ajiboye, Khareem Sudlow
