Alphabet (GOOGL) – Alphabet, also known as the parent company of Google and several former Google subsidiaries of Google, such as Internet search service providers, online advertising, content creation platforms (Blogger.com and closed Google+), Youtube, Google Maps, mobile operating systems like Android, including Google Cloud and AI developed by Google.
In addition to software and services, Alphabet has an interesting hardware business line such as Waymo, mobile phones, Nexus laptops, Chromebook Pixel, and the current buzz, Quantum Computer, which was created for the benefit of AI development that Google claims it can process faster than existing supercomputers. This may become a highlight and investor’s hope for Google’s third-quarter earnings announcement tonight (after the US market closes), although it may take longer to take shape for commercial use.
Alphabet’s 2nd quarter revenue was $38.9 billion (net revenue of $9.9 billion), $ 32.6 of which came from advertising. The breakdown of the report showed that most advertising revenue came from mobile searches and video streaming on YouTube, although the cost-per-click (CPC) and cost-per-thousand impressions (CPM) decreased but the amounts of clicks and impressions are increasing because YouTube is becoming more popular.
What remains a major concern for the Q3 report is the cost of Google calls TAC (Traffic Acquisition Costs) that Google paid 7.23 billion in the second quarter. The company is expected to pay $7.4 billion in the third quarter for TAC.
The revenue from other non-advertising-related products in the second quarter was $ 6.18 billion and is expected to increase to $6.35 billion in the third quarter. There are still products that make continued losses to Google, such as Self-driving vehicles (Waymo) and Google Fiber, as well as other joint venture projects, with a processing fee of $989 million, but with a return of only 162 million dollars.
In the 3rd quarter, FactSet has predicted that Alphabet’s revenue would be around $43 billion close to revenue of the previous quarter and earnings per share should be $12.32 per share.
As for GOOGL’s stock price, it made the highest price ever in April, at 1,289 and continued in October. Stuck at the high zone of the second half at the 1,265 level, with the first support at the low zone of the previous week at 1,240., if the latter breaks then the next support is at 1,190 (high in May). The key resistance is around 1,289 and the psychological resistance at 1,300.
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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand
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