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Alphabet earnings: Here’s why Google stock is tumbling despite profit spike

Alphabet earnings: Here’s why Google stock is tumbling despite profit spike
[Photo: Justin Sullivan/Getty Images]

Shares of Alphabet fell off a bit of a cliff in after-hours trading today after Google’s parent company reported lower-than-expected results for its non-advertising revenue, the so-called Other Bets category that includes Waymo and Verily.

The company also reported an operating margin slightly lower than expected, 21% versus a 22% consensus estimate, according to CNBC, while its traffic acquisition costs rose 13% to $7.44 billion. Alphabet’s stock was down more than 3% in after-hours trading as of late afternoon.

Alphabet beat analysts’ estimates on both revenue and EPS, but investors are becoming increasingly nervous about its operating costs, particularly amid the specter of Amazon and its growing share of the digital ad market.

Here are the key numbers from Alphabet’s fourth-quarter 2018 report:

  • Revenue: $39.28 billion versus $38.93 billion, according to estimates cited by CNBC
  • EPS: $12.77, versus consensus estimates of $10.82 cited by CNBC
  • Operating income: $8.2 billion, up 22%
  • Operating margin: 21%, compared to 24% last year
  • Net income: $8.9 billion, compared to a loss of $3 billion last year
  • Google advertising revenue: $32.6 billion, compared to $27.2 billion last year
  • Other Bets operating loss: $9.7 billion, compared to $8.6 billion last year
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