Alphabet target cut on travel ad impact

• Loop Capital Markets (Hold) cuts its Alphabet (GOOG,GOOGL) target from $1,450 to $1,320.
• Analyst Rob Sanderson expects a 15% Y/Y decline in travel ad revenue in Q1 and a 20% drop in Q2 due to the coronavirus outbreak.
• The firm isn't including the impact for other ad categories in the target at this time, but Loop expects "contraction across the board."
• Alphabet shares are up 3.5% pre-market to $1,257.71 as the market recovers from yesterday's slide.

Comments

[johnfairplay]

A 9 percent drop in stock price due to reductions in an ad section that might make up 2 or 3 percent of total ad spend. Sure.

[DropDonuts]

@johnfairplay

But also any dip in ad revenue is just temporary.

[johnfairplay]

Unless human kind is actually facing a Covid-19 extinction event, in which case I care even less.

[DropDonuts]

@johnfairplay

Which would mean we have much bigger issues than just the share price of Google.

[george511]

Google long term is a safe buy don’t take your eyes off the prize. Google is about a lot more than advertising. Search profits

[deeminimus]

Yes, the sum of the parts is cheap. I'd like to have a piece of any spinoffs in the future

[george511]

Going to be interesting

[DropDonuts]

Have to think it is more than just travel. What about the ads for conferences?

In the end it is temporary and eventually this virus will pass and things will get back to normal.

Nothing here to hurt Google long term.

[jcat90]

"decline in travel ad revenue in Q1" = pretty obvious when travel is the hardest hit sector.

Surely travel ads represent a small proportion of total ad spend?

People are less likely to travel or go to restaurants/clubs/events/cinemas etc.

What will they do instead? More likely to stay at home.
What will they do at home? Increase time online.
What will they do online? Search on Google, watch YouTube video etc.

[jims11]

I think your logic makes sense. Lots of these companies can be argued both sides, including TTD and ROKU

[deeminimus]

So what % of their total ad sales are travel?
Would there be a relative increase of "stay at home" ads?

[jims11]

Good point