Google Whiffs the Billion-Dollar Shot
Alphabet capped off a fiscal years’ worth of earnings releases yesterday with a profit beat, but not a revenue beat. Shares slumped as investors pointed blame at video-sharing site YouTube, which has had a torrid year of controversy.
The Silicon Valley giant has long kept the growth of Youtube close to its chest, baking such statistics into ‘other’ on its financial statements. When the company finally announced it would reveal all yesterday, analysts took a stab in the dark at predicting the big figures.
Chances were that they would underestimate or overestimate the figures hilariously, and that’s exactly what happened. Alphabet lost sixty billion in market value (4%) during the extended trading hours, more than the company was worth at its IPO (initial public offering)!
Interestingly, all but one of Google’s five operating segments reported double-digit top-line growth, the vast majority of analysts see happy days ahead, and over the long-term, investors seemingly have it all. The trillion-dollar company’s search monopoly borderlines on unbreakable, but that hasn’t silenced the naysayers.
Critics on Wall Street argue that Alphabet has no second act. Amazon has a handle on most shopping-related searches, and it’s now growing advertising revenue 25% faster than a year ago. Apple, too, is driving up Google’s cost-base by demanding more to host ads.
Critics in congress argue that Google’s low-hanging fruit is gone, and now to impress investors, it’s playing dirty. The company has been lambasted in Washington for anti-competitive behaviour such as favoring YouTube instead of Vimeo, and Google Maps over Yelp. If a progressive democrat were to beat President Trump in November’s elections, Alphabet could feel the brunt of a BigTech breakup! Could FAANG become FAAN?