alphabet (NASDAQ: GOOG) (NASDAQ: googl) the stock is worth $ 1 trillion again – and that’s not good news.
Before the revenue came out yesterday (after closing the trade), the internet search giant was trading at around $ 1,500 per share and sporting a market capitalization of $ 1.05 trillion. Today, investors are selling the stock – still down 4.5% as of 1:30 a.m. EDT – and Google’s parent stock has returned to $ 1 trillion.
And yet the Alphabet did not lose even the gains yesterday. it beat.
Starting from earnings, analysts had predicted that Alphabet would earn only $ 8.21 per share in $ 37.4 billion in sales. Alphabet beat those numbers with one stick, earning $ 10.13 in sales of $ 38.3 billion.
Then why are stocks falling today? Well, for one thing, that revenue “beat” that Alphabet reported last night was a kind of pyrrhic. Yes, on the one hand, it was better than expected. But it still represented a 2% drop in revenue from Q2 last year – the first time the Alphabet has ever reported a decline in revenue from its business.
So is the profit number. The alphabet was earned in earnings, but did so by reporting 29% less GAAP earnings in Q2 2020 than it recorded in Q2 2019.
Do not count the Alphabet, but still. Among all the bad news, there was good news to report. Google search revenue may have dropped, but YouTube ad revenue climbed 6%. Even the alphabet computing business, though nowhere near as large as some of its rivals, got 43% higher in the quarter.
Meanwhile, despite declining GAAP profits, with rising operating cash and declining capital expenditures, Google created a positive free cash flow of $ 8.6 billion in the quarter – 23% ahead of reported net income and a 32% increase from year on year.
Trading with nearly 32 times dragging on free cash flow now, Alphabet Shares may not be cheap, but it is still an extremely lucrative cash venture, and it is boosting its money powerfully.