CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Alphabet shares tumble as GOOGL earnings miss sends shivers through Wall St

By David Burrows

09:54, 26 October 2022

Google headquarters in Mountain View, California. Photo: Getty
Google headquarters in Mountain View, California. Photo: Getty

Shares in Google owner Alphabet (GOOGL) headed decisively south after a disappointing earnings report.  Alphabet posted revenue of $69.1bn for the July-September quarter, a 6% increase from the same time last year.

So, what is so bad about that after all they are still growing?

The key point here that this is the first time Alphabet’s year-on-year quarterly revenue has risen by less than 10% since the April-June period of 2020. During this period, advertisers reined back their spending as the pandemic created economic uncertainty.

What is your sentiment on GOOG?

124.72
Bullish
or
Bearish
Vote to see Traders sentiment!

Google share price chart

The numbers in more detail

In the latest quarterly numbers, Google’s ad sales weakened - ad revenue came in at $54.5bn, up just 2.5% from the same time last year.

Another worrying sign was YouTube’s quarterly ad sales decreasing 2% from last year, the first time the Youtube’s revenue has fallen since Google began disclosing its results in 2019.

The revenue slowdown also impacted Alphabet’s profits. The company earned $13.9bn, $1.06 per share – a 27% drop on the same period in 2021.

Both revenue and earnings per share fell below consensus analyst forecasts.

This earnings miss is no doubt one of the reasons the stock price fell 6% immediately after the report’s release.

The stock price fell to just over $103 but has since recovered somewhat to the current $104.9 level. But this is some way from the year high of around $150 in November 2021.

Growth priorities

Commenting on the latest third quarter results Sundar Pichai, CEO of Alphabet and Google, said: “We’re sharpening our focus on a clear set of product and business priorities.

META

272.65 Price
+2.750% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.35

AMD

119.47 Price
+1.760% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.08

TSLA

207.56 Price
+2.020% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.29

AMZN

122.84 Price
+1.950% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.35

“Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”

While Alphabet did not give a projected target for the rest of the year, Ruth Porat, CFO of Alphabet and Google, said: “We’re working to realign resources to fuel our highest growth priorities.”

Big tech numbers

Laith Khalaf, head of investment analysis at AJ Bell, thinks there is some cause for concern, not just for Alphabet but other big tech firms and market sentiment in general.

“All good things must come to an end, but it is still a jolt to see advertising revenue on Google-owner Alphabet’s Youtube platform fall for the first time on record.”

He adds: “While bad news for its parent company, the reversal in fortunes also says something less than encouraging about the state of the economy and is a negative omen for the wider digital advertising space.”

Khalaf suggests the results of the big technology firms will be seen as a key determining factor in market sentiment going into the US third quarter reporting season and both Microsoft (MSFT) and Alphabet have given investors reason to worry.

“Microsoft may have topped forecasts but that’s only because expectations were set pretty low, and this is the weakest growth since 2018. Meanwhile Alphabet reported its slowest growth for more than a decade, excepting the initial stage of the pandemic.

He concluded: “It was notable to see Microsoft talking about a slowdown in the previously buoyant and fast-growing cloud computing space and investors will be watching closely to see if this negative commentary is repeated by Amazon (AMZN), increasingly reliant on its Amazon Web Services arm, when it reports later this week.”

Markets in this article

GOOGL
Alphabet Inc - Class A
124.14 USD
0.76 +0.620%
MSFT
Microsoft
332.64 USD
4.4 +1.340%

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 535.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading