Home Stock Market Google's earnings are expected to be bright despite dark antitrust clouds

Google’s earnings are expected to be bright despite dark antitrust clouds


When Alphabet Inc., Google’s parent company reports first-quarter earnings on Tuesday, the bottom line should be ad sales.

The same cannot be said for its prospects on the legal front.

Alphabet
GOOGL,
+ 2.10%

GOOG,
+ 2.09%

are expected to see revenue growth of around 25% year over year, when the COVID-19 pandemic prompted some companies to cut off their advertising budgets to preserve cash. The company’s sales are largely dependent on the sales of ads on search engines, YouTube and other websites, which have made the company so dominant in the online advertising industry.

However, that dominance has led to scrutiny. On Wednesday, Wilson White, the senior director of public policy and government relations, became Google’s latest chief executive officer to be appointed by the congressional committee. Members of the Senate Judiciary Committee for Competition Policy, Antitrust and Consumer Rights, as well as witnesses, have roughly reported to Wilson and Apple’s chief compliance officer about the stores. their company’s respective application.

Read more: The Senate hearing on app stores puts Apple and Google on the radar of the law

Jared Sine, legal director at Match Group Inc.
MTCH,
+ 3.85%
,
claims that Google called Match the night before his testimony was made public to press why his testimony differs from Match’s comment in its latest earnings call. Sen. Richard Blumenthal, D-Conn., Quickly jumped on the call to being “capable of action.”

White viewed the call as “an honest question” and did not see it as a threat. “We are never going to intimidate our partners because they are the lifeblood of the Google Play app store,” he said.

However, a developer’s accusation and a scolding from a politician have turned out to be the narrative for the past two years for Google: that it has engaged in anti-business operations. compete with your search business, resulting in Many lawsuits come from the Department of Justice and the states, as well as overseas surveys.

In a proxy statement filed late Friday, Alphabet’s board recommended against a shareholder proposal to the board to report “how it monitors risk related to behavior. anti-competition ”.

“The global regulatory landscape is increasingly evolving, complex and multifaceted,” says Authority. “We have a clear and oversight responsibility
structured to assess and manage competition-related risks on an ongoing basis that we disclose. “

That doesn’t seem to be a problem, though, given the growing ad revenue of market leader Google, Facebook Inc.
FB,
+ 1.55%
,
Amazon.com Inc.
AMZN,
+ 0.96%

and others. Even Apple Inc.
AAPL,
+ 1.80%

– that is Changing operating system scheduling is considered to be harmful to ad-based revenue models – is expected to add the second ad position in the “recommended” section on its App Store search page, according to a Financial Times report on Thursday.

What to expect

Income: Alphabet average is expected to post earnings of $ 15.70 a share, up from $ 13.48 per expected share at the beginning of the quarter, based on 37 analysts surveyed by FactSet. . Alphabet reported earnings of $ 9.87 a share for the same quarter a year ago. Estimize, a software platform that uses community sourcing from hedge fund executives, brokers, buyer analysts and others, calls for $ 17.71 per share. .

Revenue: Wall Street expects $ 51.4 billion in revenue from Facebook, according to 30 analysts polled by FactSet. That was up from the $ 48.1 billion forecast at the beginning of the quarter and $ 41.2 billion reported a year ago. Estimated traffic acquisition cost of $ 9.1 billion, will give Alphabet $ 43.1 billion in revenue when extracted; by that standard, Alphabet reported revenue of $ 33.7 billion a year ago. Estimize is expected to hit $ 43.6 billion in revenue after eliminating traffic acquisition costs.

Ancient movements: Shares in Alphabet fell after three out of seven previous earnings reports. Stocks rose 31% in 2021 and 80% over the past 12 months, until Wednesday’s market close. For comparison, the S&P 500 is broader
SPX,
+ 1.09%

increased by 11% and 47% respectively.

What analysts are saying

Cowen analyst John Blackledge concludes in an April 14 note that Google’s good fortune reflects a spike in ad market recovery and a spike in search spending, Cowen analyst John Blackledge concludes. in an April 14 note that increased the company’s price target to $ 2,600 from $ 2,400, while maintaining a better rating.

Blackledge predicts that Google search revenue will grow 45% year-on-year, up from a 28% increase in the previous quarter.

JP Morgan analyst Doug Anmuth rated Google as his top choice and the next most likely technology company to reach $ 2 trillion in market value. (As of Friday, Alphabet is worth $ 1.5 trillion.)

“We are still active in improving the top and final trajectory
Anmuth said in an April 19 note. “Google Search is still a great value engine at 58%.” [sum of the parts evaluation]or worth more than $ 1T, with Google’s next growth drivers YouTube & Cloud accounting for 22% and 14%. “

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