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Google’s stock slide as $7.4 billion Q4 traffic spend puts strain on earnings

Google’s-7

While parent company Alphabet Inc. beat Wall Street estimates for revenue and profit in Q4, the company’s stocks slid as investors remained worried about spending in the same quarter

As per the numbers shared by Alphabet Inc., they reportedly spent $31.07bn in overall fourth-quarter costs and expenses. This was up 26% from the same period last year. Capital expenditures also rose 64% compared to the same period, and was calculated at $7.08bn.

Some of that spending was driven by Google. In Q4 2018, the advertising revenue reached $32.6bn, which is a 20% increase YoY. Incidentally, Google had reported the same growth rate in the same quarter in 2017, which shows that growth could have slowed down in many ways. 

Google also had to spend more to attract traffic, particularly to the search engine. This included the deal that allowed Google to become the default search engine on Apple’s iOS devices. In total, Google had to pay as much as $7.45bn to acquire traffic during the quarter. Incidentally, this was up 13% compared with Q3 2018, and up by 15% over Q4 2017.

Revenue from the cloud business and hardware including the Pixel smartphones and the Home smart speakers rose 31% to $6.49bn.

The company’s revenue for the quarter was $39.1bn, up 22% from the $32.2bn reported in the corresponding quarter the year before. At the same time, the operating income increased 13%, and is now at $9.7bn, compared with $8.6bn in the same period in 2017. 

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