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Google’s advertising revenue plunges

Posted by on August 2nd, 2020


Google, the world’s most popular search engine firm, was the only one out of the four major technology companies (including Amazon, Facebook, and Apple) that failed to impress investors with its Q2 2020 earnings results.

Why Google shares plunged: Google Properties revenue dropped 8% to $25.13 billion as against estimates of $24.98 billion. That segment includes advertising and services revenue from Gmail, Google Play, YouTube, and Google Search.

Alphabet shocked investors on Friday by reporting a decline in Google’s advertising revenue year-over-year for the first time in history. Consequently, Alphabet’s class A (Google’s parent company) share price closed at $1,482.96 after losing about 3.17%, breaking its strong support level of $1,500.

Stock traders’  growing concern over Google’s ability to raise its revenue from advertising  was partly responsible for the unimpressive performance in its share price

However, the search engine giant reported quarterly profit of nearly $7 billion on revenue that topped $31 billion after removing traffic-acquisition costs.

We’re working to help people, businesses, and communities in these uncertain times,” said Sundar Pichai, Chief Executive Officer of Google and Alphabet. “As people increasingly turn to online services, our platforms — from Cloud to Google Play to YouTube — are helping our partners provide important services and support their businesses.”

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Why you shouldn’t sell the stock yet: Amid all the bad macros stated above, YouTube advertising revenue surged by 6%, even as Alphabet’s latest business segment, cloud computing business, got 43% bigger in Q2, 2020

“In the second quarter our total revenues were $38.3B, driven by the gradual improvement in our ads business and strong growth in Google Cloud and Other Revenues,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “We continue to navigate through a difficult global economic environment,” she added.

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