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Google’s Alphabet Soaring High

goog earnings
Posted: February 4, 2016 at 1:06 pm   /   by   /   comments (0)

Alphabet (GOOG), Google’s parent company, has recently released its 4th quarter earnings. According to Wall Street, the company has big revenues and profits.

With their advertising revenues bringing in huge profits, the parent company of Google reported earnings per share off $8.67 on the $21.33 billion in revenue. This 4th quarter reported figures — the first when Alphabet was launched as an umbrella entity — has topped experts’ predictions of $8.10 and $20.77 billion.

As far as bragging rights are concerned, Alphabet is the world’s most valuable company, bypassing Apple (APPL). GOOG’s stocks bumped up over 5% in after-hours trading Monday; the $550 billion market capitalization of Alphabet has easily eclipsed that of Apple’s $538 billion.

These results would’ve been impossible a year ago, when Apple had almost $775 billion in market capitalization, while Google had only half of that at $366 billion. But it has been a rough time for Apple this year; their disappointing earnings report caused the company to shed almost $37 billion in one day.

“Alphabet is also in a much better position than Apple to tackle innovation challenges and bring new, appealing products to market,” said the editor of Investing.com, Clement Thibault. As to breaking dependency on their smartphone lines, she said it “is something Apple has been having a lot of trouble with.”

goog earnings

A New Company Called Alphabet Now Owns Google; Sundar Pichai Becomes New CEO. Photo from thehackernews.com

Google’s After-Hours Trading

GOOGL, the class A stock of Alphabet, has increased by over 7% in about the first few minutes of the after-hours trading Monday. GOOG (its Class C stock), on the other hand, jumped over 8% after the closing bell on Monday. However, both of the stocks had retreated a little after the surge.

Ruth Porat, the CFO of Alphabet, said, “Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we’ve been investing for many years.”

Implications of the Q4 Earnings

According to the Author of “Newsvesting: Use News and Opinion to Grow Your Personal Wealth”, Matt Towery, Alphabet is the present-day equivalent to IBM in the latter half of 20th Century and more. “It’s hard not to notice that since the FCC ruling on net neutrality [in February 2015], their shares have soared. With such diversity in new products and dominance in their core businesses, they have become the true blue chip stock for the future,” Towery said.

What this Means for Investors?

For investors, this would mean that they should expect Alphabet to invest more money in Google.

According to the CEO of Google, Sundar Pichai, this quarter Gmail has joined the list of Google products that have more than 1 billion users; including Search, Android, Chrome, YouTube, Maps, and Google Play.

He also emphasized two of the main goals of Google: to bring its technical strengths to all of its products and to make sure it’s solving big problems.

“We’re becoming very competitive. I expect to get significant traction in 2016,” Sundar Pichai added.

With that being said, it would be wise for investors to place their bets on Alphabet.