alphabet 09.30 NASDAQ: GOOG 09.30 NASDAQ: GOOGL The stock is again worth $ 1 trillion – and that’s not good news.
Before the profit came out yesterday (after the close of trading), the Internet search giant traded about $ 1,500 per share and granted a market capitalization of $ 1.05 trillion. Today, investors are selling the stock – still 4.5% at 13:30 EDT – and Google’s parent stock is again at $ 1 trillion.
And yet the alphabet did not even miss its profit yesterday. That rhythm,,
Guidelines for earnings, analysts predicted that Alphabet would earn only $ 8.21 per share on sales of $ 37.4 billion. Alphabet beat those numbers with a stick, earning $ 10.13 from $ 38.3 billion in sales.
So why are stocks declining today? Well, for one thing, that “win” revenue that Alphabet reported last night was like a feast. Yes, on the one hand, it was better than expected. But it still represents a 2% drop in revenue from Q2 last year – for the first time Alphabet sometime reported a decline in revenue from its business.
Similarly, the profit number. Alphabet won in earnings, but did so, reporting 29% less profit from GAAP in the second quarter of 2020 than in the second quarter of 2019.
However, do not count the alphabet. Against the background of all the bad news, there was good news. Google search revenue may have fallen, but YouTube ad revenue has risen 6%. Alphabet’s cloud computing business, too, although nowhere as big as some of its competitors, is 43 percent larger in the quarter.
Meanwhile, despite declining GAAP earnings, rising operating cash and declining capital expenditures, Google generated a stellar $ 8.6 billion positive free cash flow for the quarter – 23% ahead of reported net income and 32% year-over-year growth.
Trading at approximately 32 times free cash flow retention at the moment, Alphabet shares may not be cheap, but it is still a hugely profitable money company and it is growing its money sharply.