Google stock jumps 7% as company smashes earnings estimates
Alphabet, Google’s parent company, reported quarterly profits that beat expectations as the company raked in money from online ad sales while facing lawsuits alleging it misused its market power.
Alphabet shares rose nearly 7% in after-hours trading on Tuesday as the company reported fourth-quarter revenue of $75.3 billion, up from $72.2 billion. expected on Wall Street.
Google’s total revenue was $74.9 billion, above estimates of $71.652 billion.
Google generates more revenue from internet ads than any other company, but has been accused in court of deceiving advertisers and publishers to reap windfall profits.
Alphabet shares rose nearly 7% in after-hours trading on Tuesday as the company reported fourth-quarter revenue of $75.3 billion.
The company’s third consecutive quarter of record sales reflects growth in Google’s ad-laden services such as web search, email and YouTube video streaming, since the pandemic made hybrid working commonplace in much of the world. part of the world.
Google had said that in the third quarter it lost sales because companies lacked marketing and the iPhone’s new privacy measures reduced its ability to track users online.
The company also announced on Tuesday a 20-for-one stock split that would take place in July if approved by shareholders.
In the fourth quarter, the company’s advertising revenue rose 32.5% to $61.2 billion from an average estimate of $57.1 billion.
Main rival Meta Platforms Inc, which owns Facebook, released financial results on Wednesday, including for the first time a breakdown of how its Reality Labs unit is doing with its advertising business.
Others, including Amazon and ByteDance’s TikTok, have taken small shares from Google in the global advertising market.
Although market forecasters expect the trend to continue over the next few years, they don’t expect a major slippage from Google’s leadership position. Google’s secondary businesses, including Cloud, also increased their overall sales.
Alphabet CEO Sundar Pichai is seen above. The company’s third straight quarter of record sales reflects growth in Google’s ad-laden services
Google sign at Google headquarters in Silicon Valley. Google generates more revenue from internet advertisements than any other company
Google Cloud, which trails Amazon and Microsoft Corp in cloud services market share, increased revenue 45% to $5.5 billion, above estimates of $5.4 billion.
Alphabet also announced record quarterly sales during the holiday season for its Google Pixel smartphones despite supply constraints.
Alphabet’s quarterly profit was $20.6 billion or $30.69 per share, beating expectations of $27.56 per share and marking a fourth straight quarter of record earnings.
Alphabet’s earnings are benefiting from unrealized gains from its investments in startups, and the company also got a boost last year from extending the useful life of its servers and networking equipment.
Last month, court documents were unsealed alleging Google was manipulating online advertising markets for its own benefit.
The damning charges in the lawsuit led by the Texas attorney general accuse the search giant of running a digital advertising monopoly that has increased costs for advertisers and hurt ad industry competitors and publishers.
This graph explains the allegations that the Bernanke program caused AdX to drop the second bid from the auction and reduce the publisher’s revenue. Google reportedly kept the difference before adding it to a “pool” to use to inflate other auctions. In this example, the advertiser pays $18, the publisher receives $7.20 ($9 less Google’s 20% fee), and Google places the remaining $18 – $9 = $9 into a pool to spend on other auctions.
A Google spokesperson dismissed the allegation as false and said the lawsuit in question was “full of inaccuracies and lacking in legal basis.”
Numerous lawsuits accusing Google of anti-competitive behavior in the advertising and mobile app store markets continue to be one of the biggest challenges the company faces.
Google has previously said its efforts to cut App Store Play fees to allay some of the concerns would hurt revenue.
Lawmakers in the US Senate and House of Representatives are considering a long list of bills aimed at reining in Google and other tech giants, but none have become law.
One of the bills, which would prevent companies from giving preference to their own companies, was passed by the Senate Judiciary Committee in January.