On Monday, Alphabet reported its Q4 results. Though its profits managed to rise, some aspects of the company’s performance such as Google’s advertising business looked disappointing. GOOGL stock went down.
Google‘s parent company Alphabet Inc. announced on Monday that its revenue was $46.07 billion in the fourth quarter of 2019. That represents a rise of 17% on an annual basis. The company reported diluted earnings per share (EPS) at $15.35 in the same quarter that represents a growth of 20% year-over-year.
Net income increased by 19.2% to $10.67 billion in the closing quarter of fiscal 2019. Operating income stood at $9.27 billion over the same period, rising 12.8% annually.
For the whole year 2019, the company posted revenue of $161,86 billion, going up by 18.3% compared to 2018. Its diluted EPS rose 12.5% year-over-year to $49.16 in the same year. Tech behemoth’s net income came at $34.34 billion, a growth of 11.7% on an annual basis. Its operating income was up by 24.4% to $34.23 billion in fiscal 2019 compared to the previous year.
YouTube Generated $15.15 Billion
YouTube ads gathered $15.15 billion in revenue in 2019. The amount for the Q4 was $4.72 billion. Just to compare: the sector produced $11.16 billion in revenue in 2018 with $3.61 billion in Q4 of that year. The segment does not include YouTube’s non-advertising revenue, like subscriptions for YouTube TV. This money is included in Google’s other revenue segment.
Google’s cloud business generated $8.92 billion in revenue in 2019, with $2.61 billion generated in the fourth quarter.
That compares with the 2018 fiscal year revenue of $5.84 billion for the cloud business, with $1.71 billion generated in the fourth quarter of that year.
The company’s CEO Sundar Pichai said in a statement:
“Our investments in deep computer science, including artificial intelligence, ambient computing and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet.”
Beats the Expectations – Again
Be it as it may, Alphabet again beat the analysts’ expectations. For example, during the third and fourth quarters of 2018, Google’s ad sales growth stood at 20% on a year-over-year basis. After that, the growth fell to 16% in the first quarter of 2019. Afterward, it went on dropping to 15% in the second quarter of 2019. While ad revenue growth recovered to 17% in Q3 2019, the trend appears to be down.
James Lee of Mizuho Securities stand bullish by his projections on the company. In his research note to investors, Lee wrote:
“Our long-term thesis remains unchanged as we continue to believe that Google is a positive structural story on penetrating TV advertising, improved monetization for Maps and newly introduced Discover ads, and cloud opportunities.”
And even though, Tribeca Trade Group founder and CEO Christian Fromhertz saw bullish trend as well, one interesting thing happened recently. He said one trader was betting on an even bigger climb for the technology name. The mystery trader purchased the calls for $9 each.
“We saw a buyer on Thursday of … 200 March $1,580 calls, so, they’re going out a little bit, and they’re expecting about 11% move with that particular trade, which gets you back to 52-week highs for the name. This is a pretty small trade, but it kind of gives you a sense of how institutional money is positioning.”
Yesterday, during the trading hours, the stock price was growing (+3.48%). GOOGL stock was trading at $1482. However, the stock dropped 4.5% to $1,415.90 in after-hours trading following the announcement. The current price is %1422.