Image source: Anton Gvozdikov © 123RF.com
The earnings report of Google did not quite live up to investors' initial anticipations, and as a result of that, the share price dipped during Tuesday's trading session.
The consensus forecast was for earnings of $12.42 per share; however, the company reported diluted EPS of only $10.12.
The recorded revenue of the company increased to $40.499 billion in the three months ending in September, which surpassed the initial market expectations of $40.32 billion.
Additionally, the recorded revenue for Q3 of 2019 exceeded the revenue for the same period a year ago, which was reported at $ 33.740 billion.
Nevertheless, the deterioration in the EPS performance of Google is owing to two crucial factors.
On the one hand, the recorded net income has lessened by $2.124 billion on a year-to-year basis - from $9.192 billion in 2018 to $7.068 billion in 2019 – because of higher operating expenses.
On the other hand, the company’s effective tax rate has increased two times since Q3 of 2018 – from 9 per cent to 18 per cent.
Overall, the tone expressed by Sundar Pichai, Chief Executive Officer of Google, in his earnings statement seemed positive.
"I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud. […] We're focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.”
The share price of Google temporarily reached an all-time high level of 1299.24 on Monday in anticipation of the report’s release.
However, it could not break above the fundamentally important 1300 level (because of the two zeroes), and subsequently, the price tumbled on the weaker EPS data.
Given that the price dipped to 1260.66 during Tuesday’s trading session, market analysts start to expect the termination of the previous bullish trend.
The historically significant resistance level, which has already been tested twice before, appears as a likely trend reversal point.
Google 1D Chart. Image source: Trendsharks ©, created with TradingView.com
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