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

Tech giants still crush the ad market despite looming threats

Data: eMarketer and Zenith Media; Chart: Axios Visuals

Despite ongoing efforts to reel in the dominance of Big Tech companies, a few major firms still manage to eat up more ad revenue than most other publishers (and publishing industries) combined.

Why it matters: The continued strength of these companies, particularly in the data-based advertising sector, has shifted the focus in Washington over the past three years from holding firms accountable for bad policies or sloppy mistakes to taking action against them as monopolies.

Go deeperArrowJul 25, 2019

Apple earnings top estimates even as iPhone sales sag

An iPhone with Apple's forthcoming credit card. Photo: Apple

Apple reported earnings and revenue ahead of estimates Tuesday as weakness in the iPhone business was offset with growth in wearables.

Why it matters: Apple has been leaning on those newer businesses amid weakness in the smartphone business, but it's still critical for Apple to keep customers on its mobile platform in order to build its services market.

Go deeperArrowUpdated Jul 30, 2019

Tulsi Gabbard sues Google over alleged free speech infringement

Tulsi Gabbard. Photo: Sean Rayford/Getty Images

2020 presidential candidate Rep. Tulsi Gabbard (D-Hawaii) is suing Google for allegedly infringing on her free speech rights after her campaign ads were temporarily suspended following the first round of Democratic primary debates, reports the New York Times.

Why it matters: The lawsuit likely marks the first time a presidential candidate has sued a Big Tech company, according to the Times, and comes amid growing outcry among Republican lawmakers that platforms like Google and Twitter are censoring conservative speech. Gabbard, who identifies as a progressive on most issues, has attracted cross-party attention — including from right-wing outlets like Breitbart and Fox News — as a result of her anti-war message.

Go deeperArrowJul 25, 2019