Google shares rocketed up in price following their earnings release yesterday. The share price in pre-market today is currently just $2 short of all-time highs, recovering all the losses incurred during a poor 2022 start for the market.

Earnings

The CEO started by saying that AI technology continued to drive value to costumers across their most important products. Q4 saw ongoing strong growth in their advertising business, which helped millions of businesses thrive and find new customers. A quarterly sales record for the Pixel phones was achieved despite supply constraints and Cloud business continuing to grow.

Revenues increased 41% to $257B and Google had an operating margin of 31%. EPS totalled $112.20. The unexpectedly strong surge in search advertising revenue raised Wall Street’s hopes that the internet group’s momentum would continue as the coronavirus pandemic recedes.

Stock split

The other factor adding to the enthusiasm of investors was the announcement of a stock split. This will be only the second time Alphabet have done this.

The split will be 20-1, effective at the close of business on July 1, 2022. A stock split for a large company is often received as good news as the share price will lower, making it more obtainable for smaller investor accounts, driving the demand. The current price, in pre-market, is $3035. Not the cheapest share on the market. The stock split will take the price down to around $150 as of todays price, allowing more investors to take a position in the company.

Privacy concerns

The recent earnings were all and good. 2021 provide results that beat expectations. However, Alphabet may still face problems in the future. Ad revenue is a main driver or income for Google. Recent privacy concerns have added some concern for analysts. Stronger policies will lead to less targeted advertising for the company. This could lead to them losing some of their giant market share.

So

There is much to look forward to. This strong boost may lead to some good days and weeks for the price of Google shares, much the opposite of recent weeks.

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