Value Of ComScore's Data Is Debunked

Data generated from ComScore (SCOR) over the past quarter led investors to believe that ad-clicks for Google (GOOG) were weak. The GOOG shorts/bears were using the SCOR data as fuel for sending GOOG shares lower this whole year. All that changed yesterday after the close, when GOOG reported stronger advertising revenues that helped to generate EPS of $4.84 versus analysts' consensus estimates of $4.52. EPS grew at a rate of 31.5% versus the same period last year.

GOOG shareholders got some sweet revenge in after hours trading subsequent to the company's earnings report and conference call. GOOG shares were trading about 17% higher in after hours' activity, while shares of SCOR dropped just over 8%.

The moral of the story for students and investors is to never believe single data points when they are touted by companies with self-serving agendas. Examples of such companies are SCOR and ADP (ADP), the latter of which produces its own monthly labor estimates that have a lousy track record.

In addition, ignore data points which a group of traders who are motivated for profit ram down your throats like some sort of new gospel, in an attempt to create fear and panic as a means to manipulate stock prices.

Disclosure: At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares of GOOG and short shares of ADP --- although positions can change at any time.

Comments

[CrossProfit_:]

Interesting!

From the CrossProfit website statistics we have noticed that ComScore has consistently understated our site's traffic by a factor greater than x10!!! (We stopped checking a long time ago and just checked again today.)

We are not talking about being off by 10%. Hear this loud and clear, they are off by over 90%! Google analytics on the site is pretty accurate, within 1% margin of error.

In the past ComScore explained away the vast discrepancy explaining that their system is geared to higher traffic sites and the greater the site's traffic the more accurate their numbers.

The conclusion must be that Google doesn't have enough traffic for the ComScore system to be accurate! Oh well...

Disclosure: Just fooling around and NO OPINION being expressed regarding ComScore. We do not understand the discrepancy. No one at CrossProfit has the necessary technical background to figure this out.

2008 Apr 18 08:07 AM

[Donald Johnson:]

I haven't looked at the ADP situation, but I've wondered whether its figures are more accurate than the government's. Is the market giving too much credit to the government figures and not enough to ADP?

2008 Apr 18 08:28 AM

[Yuriko777:]

Google is ALL over the board right now because of Comscores blunder.

I once was bullish on Comscore. That is a thing of the past. Those
guys couldn't pass an exam if the answers were provided to them.


If they got it that wrong with Google it's a sign that Comscore does
not know what the hell it's doing.


I'm dumping 2000 shares of Scor at the next uptick and enterng a short
position from there.

2008 Apr 18 08:33 AM

[Yuriko777:]

Scratch that first post. I've hated ComScore since 2 months ago when they made the first Google blunder and copied that from my original post. As we can see notthing has changed with those idiots.

I once was bullish on Comscore. That is a thing of the past. Those
guys couldn't pass an exam if the answers were provided to them.


I added a second short position at yesterdays closing.

2008 Apr 18 08:37 AM

[dsoldier2:]

I agree with Donald Johnson. I believe the ADP report to be far more accurate than the government report for non-government employment. Particularly when you look at the months of adjustments the government makes after the fact. Bad example using ADP.

2008 Apr 18 12:52 PM