Jul 25, 2019

Alphabet stock rises on earnings beat

Photo: David Paul Morris/Getty Images

Stock for Google's parent company, Alphabet, was up over 6% in after-hours trading Thursday after the company reported that it met Wall Street expectations revenue and earnings per share.

Yes, but: The company continued to report major losses for its "other bets" category, which includes Alphabet-owned side projects like Waymo and Verily. In total, Google lost nearly $1 billion dollars on its moonshot projects.

Why it matters: Investors are eager to see how well Google is able to monetize its "other bets," since its main source of revenue, advertising, is growing slower than it used to.

The details: The company reported a 19% revenue growth year over year, which is slightly higher than what Wall Street was expecting, but still a slower growth rate than previous year-over-year tallies for the tech giant.

  • On the bright side, the company reported that its traffic acquisition cost was lower than analysts had expected. This means that it paid other companies, like Apple, less to send users its way.

By the numbers, via CNBC:

  • Earnings per share: $14.21 per share (excluding items), vs. $11.30 per share expected, per Refinitiv survey of analysts
  • Revenue: $38.94 billion, vs. $38.15 billion expected, per Refinitiv
  • Traffic acquisition costs: $7.24 billion, vs. $7.27 billion, according to StreetAccount

Be smart: Investors have been bearish on Google's ability to grow its ads business ever since it reported a significant deceleration in the growth of its ad business last quarter.

  • This new earnings report showed that Google's ad business is still growing slower than it used to, but it met investor expectations for how much it would slow.

The big picture: Despite positive earnings, Google faces major pressure from regulators that are eager to rein the tech giant in.

  • Ahead of earnings on Thursday, Democratic presidential candidate Tulsi Gabbard sued Google over alleged free speech violations, throwing Google even further into the political crosshairs of the 2020 election.
  • The Justice Department said Tuesday it had launched an inquiry into the market power of major online platforms, likely including Google.
  • Google is soon expected to pay a multi-million dollar settlement with the Federal Trade Commission for violating children's privacy laws.

The bottom line: Google has the largest digital ad business of any company in the world, bringing in roughly 30% of all digital advertising revenue globally each year. Its ads business is so big that it's proving hard to grow and hard to keep big without drawing the skepticism of policymakers, who say its size represents a monopoly.

Go deeper

Biden formally secures Democratic presidential nomination

Joe Biden speaks at Delaware State University's student cente on June 5. Photo: Jim Watson/AFP via Getty Images

Former Vice President Joe Biden became the formal Democratic presidential nominee on Friday evening, per AP.

The big picture: Biden has been the presumptive frontrunner to take on President Trump since Sen. Bernie Sanders suspended his campaign in early April.

Updated 6 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 6,724.516 — Total deaths: 394,018 — Total recoveries — 2,996,832Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 1,894,753 — Total deaths: 109,042 — Total recoveries: 491,706 — Total tested: 19,231,444Map.
  3. Public health: WHCA president says White House violated social-distancing guidelines to make reporters "a prop" — Jailing practices contribute to spread.
  4. Sports: How coronavirus could reshuffle the sports calendar.
  5. Jobs: Better-than-expected jobs report boosts stock market.
  6. Media: The Athletic lays off 8% of staff, implements company-wide pay cut.

Scoop: German foreign minister to travel to Israel with warning on annexation

Heiko Maas. Photo: Michael Kappeler/picture alliance via Getty Images

German Foreign Minister Heiko Maas is expected to travel to Israel next week to warn that there will be consequences if Israeli leaders move forward with plans to annex parts of the West Bank, Israeli officials and European diplomats tell me.

Why it matters: Israeli and European officials agree that if Israel goes ahead with unilateral annexation, the EU will respond with sanctions.