ABC 09.30 NASDAQ: GOOG 09.30 NASDAQ: GOOGL the stock is worth $ 1 trillion again – and that’s not good news.
Before earnings appeared yesterday (after the close of trading), the Internet search giant traded about $ 1,500 per share and maintained a market capitalization of $ 1.05 trillion. Today, investors are selling shares – still down 4.5% as of 1:30 p.m. EDT – and Google’s parent stock is returning at $ 1 trillion.
And yet the Alphabet did not even miss earnings yesterday. It beat.
Focusing on earnings, analysts predicted that Alphabet would earn only $ 8.21 per share, selling $ 37.4 billion. Alphabet broke those numbers with a stick, earning $ 10.13 from sales of $ 38.3 billion.
So why is the stock declining today? Well, on the one hand, this income “beat”, which “Alphabet” reported last night, was a kind of pirric. Yes, on the one hand, it was better than expected. But it still meant a 2% drop in revenue from the second quarter of last year – for the first time Alphabet sometime reported a decrease in income from their business.
Similarly, the number of earnings. Alphabet won the profit, but did so by reporting 29% less GAAP profit in the second quarter of 2020 than in the second quarter of 2019.
Although don’t count the Alphabet yet. Among all the bad news was also good news. Google search revenue may have fallen, but YouTube advertising revenue has risen 6%. Alphabet’s cloud computing business, too, though nowhere as big as some of its competitors, is 43% more for the quarter.
Meanwhile, despite declining GAAP profits, with operating cash growth and falling capital expenditures, Google received a stellar $ 8.6 billion in positive free cash flow in the quarter – 23% ahead of net income and 32% more than the year.
By trading about 32 times, postponing free cash flow now, the alphabetical stock may not be cheap, but it is still an extremely profitable money venture, and it greatly increases its cash flow.