Alphabet Cloud and YouTube Revenues Boosted By Lockdown

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    Internet giant Alphabet, owner of Google reported mixed…


    Super Harley

    Alphabet Inc Class A Still +8.90% Higher After Earnings
    $1,342.27 109.68 #GoogleDoodle


    Citigroup Raised Alphabet’s stock price target raised to $1,600 from $1,400

    Citigroup raised its stock price target on Alphabet Inc. GOOGL, on Tuesday to $1,600 from $1,400 and said it expects revenue to rebound sharply in 2021

    . “We now model 5% year-on-year growth in 2020, with full-year revenue reaching $169.6 billion, and we expect 20% year-on-year rebound in 2021, with full-year revenue reaching $203.4 billion,”

    Analysts wrote in a note to clients. Citi lowered revenue estimates for the second quarter to reflect the impact of COVID-19, which has hurt ad revenues. Google said on its first-quarter earnings call that search revenues were down 15% in March and April, while YouTube revenue growth decelerated to high single digits by end March. “We assume revenue deceleration stays at similar levels for rest of 2Q20, with a moderate recovery to start during 2H20 with the phased opening of the broader economy,”


    Google forecasted to drop a 5.3% in U.S. advertising revenue in 2020 by eMarketer

    Google will see a 5.3% drop in U.S. advertising revenue in 2020, eMarketer predicted in a new report, marking the first dip since the research firm began modeling the business in 2008.

    Facebook and Amazon will continue to grow advertising revenue in 2020, the firm predicts, though at a slower rate than the previous year.

    The report shows that even Google’s robust ad business will take a significant hit as the coronavirus pandemic continues to ravage businesses.

    EMarketer forecasts that Google will earn $39.58 billion in U.S. advertising revenue this year, compared to $41.80 billion in 2019. The firm expects revenue to rebound by more than 20% in 2021 and continue to see 11.8% growth in 2022. Despite the decline, Google’s ad revenues will still exceed the $36.48 billion earned in 2018, however.

    The report shows that even Google’s robust ad business will take a significant hit as the coronavirus pandemic continues to ravage businesses. While U.S. ad revenue on YouTube will continue to grow, according to eMarketer, it won’t make it up for the 7.2% drop in U.S. net search ad revenue expected this year.

    The report also signals that Google is continuing to cede advertising market share to rivals Facebook and Amazon, which are both expected to grow their businesses this year, according to eMarketer. Google has grown its U.S. ad revenue at a slower rate than the overall digital ad market since 2016, according to eMarketer principal analyst Nicole Perrin.

    By comparison, Facebook, will see its advertising revenue continue to grow this year, though at a much slower rate. The company reported $29.95 billion in advertising revenue in 2019, a 26.1% increase from the previous year. EMarketer expects Facebook to see ad revenue grow by 4.9% this year to $31.43 billion before seeing its growth re-accelerate next year.

    Amazon will also grow its digital advertising business this year, eMarketer predicts. Though it holds a smaller portion of the pie, Amazon’s ad business accounted for $10.32 billion in revenue last year and eMarketer expects it will grow to $12.75 billion in 2020.

    Facebook and Amazon’s growth during the pandemic will help them creep up on Google’s No. 1 spot in the digital advertising market. Last year, Google held 31.6% of total digital advertising spend with Facebook and Amazon holding 22.7% and 7.8% respectively, according to eMarketer. This year, the firm expects Google to claim 29.4% of digital ad spend with Facebook and Amazon clawing 23.4% and 9.5%, respectively.

    A Google spokesperson declined to comment on financials outside of the company’s earnings report. In its last quarter earnings presentation, Google CFO Ruth Porat told analysts the company saw a dip in revenue in March when the coronavirus pandemic picked up in the U.S. But shares spiked after hours on the report as executives painted a more optimistic view of future spending than investors had previously feared.

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    [size=5][b]Needham lowers Google estimates amid ‘search weakness’ and growing threat from Amazon
    Needham analysts said Tuesday they were lowering revenue estimates for Google’s second quarter because of declining U.S. search revenue.

    Analysts also lowered estimates for Google’s fiscal year 2020 and 2021.

    Needham analysts Amazon represents a “structural attack against Google’s-search product, not just a COVID-19 related problem.”

    Needham analysts predict Google’s second quarter revenue will be down 7% year-over-year because of the company’s declining U.S. search revenue. That’s a downgrade from the firm’s previous expectations of a 5% drop.

    In June, eMarketer estimated that U.S. net search ad revenue would drop 7.2% this year. Needham analysts said they agree with the firm’s call for declining U.S. search revenue, and said their sources suggest international ad revenues are down even more than in the U.S.

    Google’s ad weakness is being driven by “material declines in travel, auto, entertainment, media and retail ads — both search and video ads,” Needham analysts said.

    “Until COVID-19 is controlled enough that the economy strengthens and consumer demand returns,” analysts said they expected those travel, entertainment, media and retail categories would remain weak.

    Needham now expects Google’s revenue to be flat or slightly down for the full year. It previously expected growth of between 2% and 3%.

    Last year in the U.S., Google held 31.6% of total digital advertising spending with Facebook and Amazon holding 22.7% and 7.8% respectively, according to eMarketer. This year, the firm expects Google to claim 29.4% of digital ad spending with Facebook and Amazon holding 23.4% and 9.5%, respectively.

    Needham analysts believe that though Google search will report a falling share of digital ad revenue this year, it will be more because of Amazon, not Facebook. They pointed to the growing number of brands that are currently boycotting Facebook advertising, and said they expect this boycott to last through the elections in November. They also said “many small businesses will not survive Covid-19.”

    “Both of these data points suggest that ad revenue growth at FB in 2020 will be challenged,” they wrote.

    They said Amazon is the “better reason” Google search ads are losing market share, since it represents a “structural attack against Google’s-search product, not just a Covid-19 related problem.” Analysts cited figures for Amazon Prime members, saying that 70% of Prime members say they begin product searches on Amazon and spend an average of $1,400 a year.

    “We expect [Amazon]’s total ad revenue to grow more rapidly than we estimated pre-COVID because consumers are spending more time on AMZN during COVID-19, which increases its digital advertising ROI and attracts incremental search advertisers,” analysts wrote.
    YouTube TV pricing[/b]

    In late June, Google-owned YouTube said it was raising the price for its television subscription service to $64.99 a month, an increase of $15. The service, which allows customers to watch more than 80 TV channels over the internet, had 2 million subscribers as of the end of 2019, Google CEO Sundar Pichai said on the company’s Q4 2019 earnings call.

    Needham analysts said the price increase could be because search weakness is encouraging Google to drive its ancillary businesses to break even more quickly, or because it’s trying to exit its “skinny bundle” business by encouraging consumers to disconnect (instead of just closing it down outright, which would risk irritating consumers).


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