Alphabet shares set to slide as quarterly ad revenue falls short
Last updated: 07:01 31 Jan 2024 EST, First published: 16:41 30 Jan 2024 EST
Alphabet Inc (NASDAQ:GOOG) shares were trading almost 6% lower in pre-market trading on Wednesday after advertising revenue fell short of expectations.
For the fourth quarter of 2023, YouTube ads contributed positively, growing by 16% to reach $9.2 billion, but overall Google ad revenue fell slightly short of analyst predictions, recording $65.52 billion against an estimated $65.8 billion.
That sent shares 4% lower in afterhours trading on Tuesday, with the decline extended in pre-market trading this morning at $144.54, having notched an all-time high of $155 last week.
Despite the advertising miss, the parent company of Google reported robust quarterly financial results that mainly surpassed analyst expectations in revenue and profit.
Revenue for the quarter increased by 13% year-over-year to reach $86.3 billion, exceeding expectations by $1 billion on earnings per share of $1.64, which came $0.04 ahead of estimates.
Operating margin expanded to 27%, marking a 4% year-over-year increase.
Google Cloud demonstrated strong performance with a 26% year-over-year increase in revenue, reaching $9.2 billion.
The operating margin for Google Cloud also showed significant growth, rising by 12 percentage points to 9%.
Google Services revenue, excluding traffic acquisition costs, was $76.31 billion, surpassing estimates of $75.97 billion.
Analysts at Jefferies noted that the market reaction to the results may be influenced by a combination of the slight revenue beat, concerns about earnings before interest and taxes (EBIT) margin, and an unexpected tax payment, contributing to the decline in the stock price in afterhours trading.
