Categories
Investing

Google Stock: Beware The Equity Investments (NASDAQ:GOOG) – Seeking Alpha

Alex Wong

Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL) is set to release earnings after the markets close tomorrow. There’s a lot riding on its release, because Google is the biggest of all the major ad-tech companies b…….

Alex Wong

Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL) is set to release earnings after the markets close tomorrow. There’s a lot riding on its release, because Google is the biggest of all the major ad-tech companies by market cap. Last week, when the relatively tiny player Snap (SNAP) missed estimates, it triggered an enormous selloff in all ad-tech names, including Google, Meta Platforms (META) and Twitter (TWTR).

Google’s release could have an even bigger impact than Snap’s, because its ad platform is much larger than Snap’s and, therefore, more representative of the industry as a whole. Google has 4.3 billion users across all of its products, representing a broad swath of humanity. Snap only has a few hundred million users, and its user base skews young. If Google’s guidance is bad, then ad-tech as a whole is likely to do poorly in the coming quarter, as Google is a bellwether for the industry.

It’s logical to ask, then, whether Google is likely to do well in the coming quarter. Many people think that we’re currently in a recession, and ad spending dips in recessions. That would tend to argue for a poor showing from Google. On the other hand, GOOG benefitted from Apple’s (AAPL) privacy changes, which shifted ad spend away from Meta and toward Google ads. In its fourth quarter earnings call, Meta said that Apple’s ATT policy pushed customers toward Google, whose ad platforms don’t depend on tracking as much as Meta’s. If that’s correct, then Google’s earnings could defy the industry-wide slowdown by taking share from a competitor.

For this reason, I’m expecting Google’s revenue to be satisfactory. I can’t predict whether it will beat or miss estimates, but it is likely to grow on a year-over-year basis. Google’s competitive position improved due to Apple’s privacy changes, and Apple is not budging an inch on the changes it made. Therefore, we should expect Google to gain share from competitors that were seriously harmed by ATT.

When it comes to the bottom line, it’s a bit of a different story. Google owns a vast portfolio of equity investments, many of which are publicly listed. Among Google’s investments, you’ll find names like:

  • CrowdStrike (CRWD).

  • Duolingo (DUOL).

  • Magenta Therapeutics (MGTA).

All …….

Source: https://seekingalpha.com/article/4525611-google-beware-the-equity-investments

Leave a Reply

Your email address will not be published.