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Alphabet (GOOGL) Sells Off Post-Q2 Earnings

Google's parent company, Alphabet Inc. GOOGL is selling off in Monday's late trading following the company's Q2 earnings results released after the bell. Revenues, ex-traffic acquisition costs (or TAC, which GOOGL always makes everyone else do the math on), reached $20.92 billion, marginally ahead of the $20.83 billion in the Zacks consensus estimate. Headline earnings per share of $5.01 include a one-time charge related to a $2.7 billion settlement with the EU.

Without this charge, earnings would have reached $8.90 per share, or ahead of the $8.17 expected in the Zacks consensus. Yet GOOGL shares are down 3% so far in the after-market, largely considered the case based on already fair stock valuation -- GOOGL shares had surpassed $1000 per share not long before today's closing bell, ahead of earnings -- as well as slightly higher TAC than expected in the quarter, and a continually falling aggregate cost per click, now at -23%. Aggregate clicks paid reached a strong 42%, though this is still down 20 basis points from its Q1 click paid totals.

The losses on "Other Bets" in Q2 was better than expected: $772 million, much better than the $1.08 billion write-off in areas such as Artificial Intelligence, Virtual Reality, Waymo (self-driving autos), etc. in Q1. Cloud services brought in $3.1 billion in the quarter just past.

The EU settlement, while considered a one-time charge, may point to a source of concern for Alphabet investors going forward: stricter anti-trust laws, especially overseas, may serve to hamstring the global search leader's methodology in how search results assist advertising revenues. Perhaps at nearly 30x forward earnings, investors are taking some profits on the news and seeing what Alphabet can do to earn its way back to quadruple-digit share prices.

For more on GOOGL's Q2 earnings results, click here.


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