Alphabet share price tumbled sharply on Wednesday as investors worried about the company’s earnings. It crashed to a low of $94.82, which was the lowest level in February 2021. Google shares have fallen by more than 37% this year, meaning they are in a deep bear market. Other tech stocks like Snap and Pinterest have also pulled back.
Alphabet stock price crashed after the Google parent company missed on its revenue and earnings. The company’s revenue rose by 6% YoY to $69.09 billion in the third quarter. This increase was about $1.55 billion lower than what most analysts were expecting. It earned $1.6 per share, which was also lower than expectations.
Alphabet’s revenue faced numerous headwinds in the quarter. First, YouTube’s revenue slowed dramatically as more users focused on shorts. Shorts, which have become incredibly popular, are significantly difficult to advertise on. Sadly, the shift to shorter videos is here to stay.
Second, the rising inflation has pushed some companies to slow their advertising spending. In a statement, the company’s Chief Financial Officer (CFO) said:
“We noted a pullback in spend by some advertisers in YouTube and Network, and these pullbacks in spend increased in the third quarter. For example, in financial services, we saw a pullback in the insurance, loan, mortgage, and crypto subcategories.”
On the positive side, Alphabet’s business was supported by Google Cloud. Its revenue jumped by 38% to $6.9 billion for the second quarter. It nonetheless made an operating loss of $699 million as the cost of investments rose.
Alphabet share price crashed as the company warned about the impact of a strong US dollar. Ruth Porat, the CFO said that the strong US dollar’s impact will be felt more on its operating income than on revenue.
The daily chart shows that the Alphabet stock price has been in a strong bearish trend in the past few months. This sell-off intensified this week after the company published weak financial results. As it dropped, it managed to move slightly below the important support level at $95.34, which was the lowest level this year.
Therefore, the Google share price will likely continue falling as sellers target the next key target at $85. A move above the resistance at $105 will invalidate the bearish view.
This post was last modified on %s = human-readable time difference 05:27