Wall Street Googling Over Goggle

Three months ago, Google reported revenue of $36.3 billion, up 17% over the previous year.  Google’s ad revenue consisted of 85% of that revenue or $30.7 billion which was up from $26.6 billion.  The company said they remain focused and excited by significant growth opportunities across their other business.  However, Wall Street didn’t want to hear that.  They wanted to know why the ad revenue growth decelerated from 24% a year ago to 15%.    I think what really pissed Wall Street off was Google didn’t have any real answer, so the they dropped the price big time.

This past week, Google reported their second quarter earnings. Revenue increased 19.3% year over year to $38.944 billion, accelerating from 16.7% growth in the first quarter, beating estimates by nearly $800 million. Net income for the quarter climbed to $9.947 billion, up nearly 21% year over year and ahead of expectations.  Equally important, ad revenue rose 16.1% to $32.601 billion.

In the second quarter, annual paid click growth for Google properties continued slowing, dropping to 28% from a first-quarter level of 39%. But this was more than offset by the fact that CPC only fell 11% — a much smaller decline than 19% in the first quarter and also the smallest drop Google has seen in three years.

Porat mentioned on the call that “the benefits of applying machine learning” have boosted ad sales on Google properties, but didn’t offer additional details. In the past, Google has talked up its use of machine learning to help advertisers (including small businesses) optimize their ad campaigns based on goals such as maximizing ad clicks, sign-ups or revenue.


Price is back in monthly supply, but the chart suggests, potential all the unfilled sell orders have been used up and so Google has a shot of reaching all time new highs in the near future.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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