Alphabet shares plummet on earnings miss and negative cash flow
Summarised from 2 outlets · 4 reports · Updated 29 Oct, 16:35 · Archive
Alphabet's share price dropped more than 10% after the company reported weaker-than-expected earnings and negative free cash flow.
Alphabet's share price fell more than 10% in early trading on Thursday following the release of third-quarter earnings that disappointed on multiple fronts. The company reported negative free cash flow of $9.07 billion, roughly three times worse than analyst expectations of $2.70 billion deficit. Total revenue reached $127.6 billion, missing estimates of $128.2 billion, whilst net income fell 25% to $26.17 billion.
Search revenue, Alphabet's core business, grew 12% year-on-year to $63.35 billion but missed analyst expectations for the second straight quarter in a row. The company maintained its full-year capital expenditure guidance of between $195 billion and $205 billion. Alphabet executives attributed some of the search revenue deceleration to foreign exchange headwinds.
Analysts pointed to artificial intelligence as an emerging threat to the search business. Despite search query growth being the strongest in five years, revenue failed to keep pace, suggesting users may be turning to AI chatbots instead of traditional search. Deepwater Asset Management's Gene Munster told CNBC that if personalised AI bots take off, they could become a starting point for commerce and impact Google's business model. If the stock closes down more than 9.77%, it would mark Alphabet's worst post-earnings reaction since going public in 2004.
How it is being reported
- Alphabet sheds record $500B in market value as AI fears hit fever pitchIf the stock closes down more than 9.77% in Thursday’s session, it will be the worst post-earnings reaction in the company’s 22-year history and the second-largest single-day loss of any stock.New York Post · 29 Oct, 16:11
- Alphabet earnings miss reflects first real sign that AI is taking a bite out of searchWall Street hammered Alphabet for an earnings miss that included weaker-than-expected revenue out of the company's core business.CNBC · 29 Oct, 11:00
- Alphabet falls 10% in premarket, putting it on course for its biggest ever post-earnings dropAlphabet reported a larger negative free cash flow than analysts had expected while maintaining its spending gudiance for the year.CNBC · 29 Oct, 08:54
- Our next steps for Alphabet stock after earnings disappoint at nearly every turnAlphabet whiffed.CNBC · 29 Oct, 01:11
In this story: Alphabet · Google · Microsoft · ChatGPT · Nvidia
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