Alphabet shares fall 5% as Google ad sales decline and earnings miss targets

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Alphabet (NASDAQ:GOOG) shares fell almost 5% in after-hours trading Thursday as the Google parent company reported fourth-quarter earnings and sales that fell short of expectations as revenue from advertising declined from a year ago.

Alphabet (GOOG) said the for the quarter ended December 31 it earned $1.05 a share, on revenue of $76.05B. Wall Street analysts had forecast Alphabet (GOOG) to earn $1.20 a share on $76.B in sales during the quarter. In the prior-year period, Alphabet (GOOG) earned $1.53 a share on $75.3B in revenue.

Advertising, which makes up the biggest piece of of Alphabet's (GOOG) revenue, fell to $59B from $61.2B a year ago. Revenue for Google Search dipped to $42.6B from $43.3B in 2021's fourth quarter, while sales from YouTube ads were down to $7.96B from $8.63B a year ago.

In a statement, Alphabet (GOOG) Chief Executive Sundar Pichai highlighted what seems to be tehe areas of focus for the company, by saying, "Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point." Pichai went on to say that "There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel device."

Alphabet's (GOOG) report came less than two weeks after the company said it would cut 12,000 jobs worldwide as part of an effort to cut costs and realign its expenses and strategies in the year ahead.

Comments

[adaret]

Google market formula short term:
A jump today - dump tomorrow equals a stock price neutralization.

[Chris Lau]

At the ground level using YouTube all the time, it has trouble. It added weird new rules (like no swearing in first seconds).

Content creators have fewer views
Audience is shrinking.

Google search ads irrelevant.

[Integr8byDarts]

It's up more than 7% today, so keep that in mind when gauging the market's reaction. Down 4% on a miss is a 3% up day in the net.

[adaret]

@Integr8byDarts it depends on how much selling takes place after that and if sheep analysts downgrade it to get better entries for clients.

[montereymd]

Cull Another 20,000. Lots of jobs in US military. Maybe instead of bad mouthing their country they can experience the real world with a little adversity and getting your azz up at 5 AM

[Legitimate]

@montereymd There is no pride in this country anymore. That’s what this country gets for being generous to those that have always hated it. That’s the truth, welcome to the American economic zone where anyone is welcome

[sixthspeed]

@montereymd seek mental help

[MoneyPig]

Oh no, will FB sell off tomorrow? Just how did FB buck the decline in ad spend that hit GOOG. Is FB employing avatar accountants in the metaverse now?

[my_symphony2003]

More cuts are needed.

[Diesel]

It didn't even give up today's gains.

It was up 7% during regular hours today.

[Will5789]

I sold a third of my small position today. Now to wait for a 20% down and load up.

[MoneyPig]

@Will5789

You roar like a lion Will Number 5789.

[OneMoreCup]

Replay of 2001....high hopes, unrealistic macro background to achieve them...FB pulled a dead cat bounce, probably a 1 or 2 quarter "mirage" followed by downtrend....Google, Amazon and Apple all issue mediocre earnings...high interest rates is Kryptonite to all high PE stocks...

[alc64]

@OneMoreCup I’m not so sure high interest rates are kryptonite for growth stocks. For one thing, aren’t we currently in an environment of normal rates around 4-5%. With the Fed moderating rates we seem to have a situation where investors can buy bonds to maturity to protect principle and then go more risk on by investing in more growth stock. As a retiree I love buying short term bonds , CDs, Treasuries etc.that I’m more comfortable putting money at more risky long term growth companies. Better all around diversity.

[OneMoreCup]

@alc64 your logic is correct ONLY in a low debt/systemic level. Unfortunately, since 2008, the amount of unproductive debt throughout the system is not sustainable, let alone for growth of any major type. 1/3 of S&P are "zombies", if they cannot roll over their debt, they cannot spend freely. Same for stock buybacks. Cos can buy back at 1-2% rates, but not 5-8%...most growth stocks require ever more debt to juice their PE or growth. Google might not need more debt but their customers certainly does...

[alc64]

@OneMoreCup good points

[alpha_guy]

So what's that, all the way back to 11:00AM this morning or something like that?

Do fundamentals honestly matter one iota in this kind of manic, diagonal up market?

[The Clairvoyant]

@alpha_guy

Alphabet probably has the best fundamentals of any company in the market. What’s their cash hoard at now? The dollar has weakened a bit, which will help going forward, and the advertising recession won’t last forever. The switch from linear to digital advertising is a secular trend that will continue for decades, and Google is the dominant player in the space. This quarter wasn’t great, but you don’t own Google for one quarter in a soft economic environment, you own it for the long term appreciation potential, and this will do well over time.

[Orangejulius]

@The Clairvoyant I'll just keep selling cash covered puts in the $80s and $90s. Adding all that up (Very high premiums given the volatility) and maybe eventually getting assigned shares will feel better than watching it see-saw every few months.

I agree that Google isn't going anywhere. I suspect they'll see a nice recovery into Q3/Q4. Right now... Don't fight the Fed. They'll keep turning the screws until they see panic. We got close to that in October, but the bulls were always waiting to start flooding in as we saw over the past month.

[alpha_guy]

@The Clairvoyant, I actually agree that GOOG is priced among the cheapest of the mega caps right now. But we're still talking about 20 times forward earnings for a company facing serious antitrust concerns and growth concerns (revenue has been stagnant QoQ for quite a while now). That's by no means a slam dunk investment IMO, and I am not a buyer here.

[TigerCub911]

Uh-oh!

[DividendNow]

“Sell in May and go away” should be changed to “sell in February and enjoy the sanctuary”…is that too much for 2023?

[Djreef1966]

What the hell happened?

[Golfsohard]

When is Google going to make profit on its Cloud business?

[Mktneutralhedger]

Ridiculous market, I think online traders in the early days (20 years ago) were more conservative than so called Institutional investors today. GO TO VEGAS, GET A LIFE!

[SivBum]

Ditto for amzn and aapl. The gorillas on the left coast.

[Pinguino Investments]

Analysts should have been more realistic. Did they really think revenue and earnings would be higher than Q4 2021? The announcement of layoffs was a clear message that some chose to ignore.

[Mktneutralhedger]

@Pinguino Investments realistic??? Thanks to Central Banks and all the liquidity pumped throughout the years this market is doped and it will stay like that until a giant crash arrives. Probably never since Central Gangsters will mess it up once again.

[GR Value]

@Pinguino Investments The point is, GOOG has like 10-15 in tangible equity I'm guessing, earns 4-4.75 a year. Basically they are worth 95-115. If we had seen eps declines and a recession Google could've easily fallen to 60-70. We haven't see it. Thus, Google is going to keep meandering 95-115 imo. When it hits 115 we'll probably re-test August highs of 4270.

The fed isn't going to create a recession so it's probably properly priced. Investors have already ignored the fed's rates more or less.

[MoneyPig]

@GR Value

Eh, a lot of what ifs. But worthy of a like. Frustratingly true, extreme government meddling has become a real nuisance in markets. Often I think so much is just make believe.

But surprise, federal tax receipts are way up, like twice, so what the **** does that mean? The most shocking number of the day for me 4 trillion in tax receipts. Chew on that folks.

[MassiveAttack1987]

I think that the CEO must step down. He may be a brilliant engineer, but he does not seem to fulfil organizational and coordinative challenges.

[Seeking more alpha than you]

@MassiveAttack1987 the CEO stays.