Google Stock Drops on Disappointing Earnings Report

Alphabet, Inc., Google, Corporate Earnings – Talking Points

  • Alphabet, Inc. posts first-quarter earnings per share of 24.62 on 56.02 billion in revenue (ex-TAC)
  • Google shares (GOOG & GOOGL) rise in after-hours trading despite a broader tech selloff
  • YouTube advertising revenue and cloud growth disappoint investors, missing expectations

Alphabet Inc., Google’s parent company, reported mixed first-quarter corporate earnings following today’s closing bell. The technology juggernaut saw Q1 earnings per share (EPS) of $24.62 versus an expected $25.71. That was on $56.02 billion in revenue (ex-TAC) vs an expected $56.07 billion, according to Bloomberg.

  • Alphabet Q1 Operating Margin: 30% vs 28.8% estimate
  • Alphabet: Q1 Operating Income: $20.09 bn vs $19.7 bn

After-hours trading saw the stock price fall over 5%, extending a 3.59% drop at the closing bell. Options pricing put the implied 1-day move at 8.33%. Investors are likely being discouraged by weak cloud-segment revenue, which is seen as a major potential growth driver over the coming years. Google’s cloud services operating loss came in at $931 million, which was above the estimated loss of $893 million.

Russia’s war in Ukraine has been a big factor in driving inflation woes across the world, prompting central banks to get more aggressive in response. That pushed many technology stocks, including Google, lower in the first quarter of the year. Google suspended services across Russia in response to its actions as well as to comply with US and EU sanctions.

YouTube advertising revenue – a major Google growth driver – for the first quarter crossed the wires at $6.9 billion versus an expected $7.5 billion. The downbeat stock price reaction may drag the broader technology sector lower on Wednesday and through the rest of the week. The weak YouTube advertising numbers were likely due to the iPhone’s ad-targeting changes.

Alphabet, Inc. (GOOGL)One-Minute Chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter





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