Google’s earnings announcement after the close of the stock market today will send a snapshot of the current state of the online advertising world.
Are companies spending more on pay per click advertising? Are advertisers cutting back? Was Google's move to cut affiliates last year a positive one or will it cost them revenue?
Expectations are that Google’s net revenue is expected to rise about 20% making it their second consecutive quarter of a 20% increase or more. For the financial type, Thomson Reuters is reporting estimates of $6.52 per share, a 22% increase from the same quarter last year.
Stock trading volume tends to pick up in anticipation of earnings announcements where the adventurous traders buy more of a company announcing earnings and the risk averse sell their shares to avoid any potential volatility. The extremely risk tolerant trade in a different market all together – the forex market where forex brokers recently started offering their customers opportunities to open accounts with minimal assets.
It is interesting to review Google’s price movement over the past month. Since early this month the stock has risen 11% in anticipation of a good quarterly report while today the stock is trading down $4 as some investors take their money off the table to avoid the potential volatility after today’s earnings announcement.
Another piece of key information at today’s announcement will be the company’s updated Android sales numbers which were last reported as activating 160,000 phones daily.
You can check Yahoo Finance for a full summary and live updates of today’s earnings conference call.
Update: CNBC reports are coming in saying Google will likely miss their street estimate earnings, coming in at $6.29 per share which is under the $6.50 estimate. Although still uncertain this is not a good short term sign for Google stock.
Even though missing estimates can be a short term hit to a stock, Google shares are still expected to rise to $675 per share making it a long term buy says Jordan Rohan, managing director of Stifel Nicolaus.
Rohan is attributing part of the possible earnings miss to hiring 800 new people, reinvesting in their company and spending money on development and marketing cost to their mobile products.
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