Markets

Breakdown of the latest developments on the global exchanges
May 1, 2019, 12:00 PM GMT
#EarningsSeason

Alphabet Inc. Shares Collapse After Disappointing Sales Growth

Google logo displayed at one of their office buildings in Silicon Valley

The company’s stock fell with 7.50% during yesterday’s trading session, after the parent company of Google reported weaker-than-expected sales growth.

Even though the EPS reached $11.9, which measures weaker growth compared to the reported $13.33 for the same quarter last year, but still managed to surpass the initial forecasts for the earnings of Q1 for 2019, which were for just $10.57 EPS.

Still, Alphabet’s weaker revenue streams disappointed the company’s shareholders who were expecting the data to show a total of $37.33 billion, but instead, the actual revenue came short at $36.34 billion.

The biggest hit to Alphabet’s performance this quarter came in the form of fines. The company was fined in March for foul play by the European Commission with $1.69 billion for unsanctioned online-advertising practices. The deduction of this charge from the overall revenue streams results in a drop in the EPS from the listed above $11.9 to actual $9.50, which is the prime reason for the collapse in the share price.

According to Margrethe Vestager, the European Commissioner for Competition, the Silicon Valley-based company is charged for:

“Google has abused its market dominance by imposing restrictive clauses in contracts with third-party websites. It prevented rivals from placing their search adverts on those websites.” [source]

This accusation came amid rising tensions between the US and the EU and escalating protectionist policies implemented by the two, hampering the international trade.

Alphabet’s stock eventually closed Tuesday’s trading session at 1198.96, which measures a drop of 97.24 dollars from Monday’s closing price of 1296.20.