Google Inc. (Nasdaq; GOOG) stock plunged after its earnings report missed estimates.
Thursday after the close, Google's posted Q2 profit of $9.71 billion, or $9.54 a share, up 19% from $8.54 billion, or $8.42 a share, in the same quarter a year earlier. Revenue rose to $11.1 billion from $9.61 billion.
Those numbers came in below the consensus estimates of $10.80 EPS on revenue $14.45 billion. And, the surprising miss spooked investors in Google stock. Shares tumbled 5% in afterhours trading and another 3.38% in early morning trading Friday.
Google still views the explosive shift to smartphones and tablets as a lucrative opportunity for Google stock investors and the company. But, the Internet search giant's second quarter results serve as a stark reminder of just how financially challenging the early stages of that opportunity can be - even with an $11 billion-plus quarter.
In recent days, there was plenty of chatter about Google shares breaking through the $1,000 price barrier, a milestone that now looks a ways off amid the earnings miss.
The following contributed to the lukewarm Google earnings.
A number of analysts trimmed their price targets on Google stock by as much as $40 (with the lowest being $860) to factor in a drop in margins as the company pours money into pioneering businesses.
But brokerages such as Piper Jaffray, JMP Securities and Canaccord Genuity boosted their price targets, citing these developments that will boost Google stock in the long run...
Piper Jaffray, citing a change Google implemented this year that allows advertisers running campaigns on its Website to simultaneously run them on PCs and mobile, said the new system will increase ad revenue in the longer run.
"Enhanced Campaigns is the biggest change in the Google ad platform to date and thus it will likely take 6-12 months for the positive impact to show in the numbers," Piper Jaffray wrote.
Money Morning tech specialist Michael A. Robinson has called Google "the only tech stock you need."
His long-term view of the stock is bullish because of its red-hot product pipeline, with rollouts in the following new fields:
"The founders of Google are nothing if not visionary leaders with solid business chops," said Robinson. "They want to move far beyond search results and advertising and Android and tablets and operating systems and social networks to become the company of the future."
CEO Larry Page remains positively excited and upbeat about Google's future.
"The shift from one screen to multiple screens and mobility creates tremendous opportunity for Google. With more devices, more information, and more activity online than ever, the potential to improve people's lives is even more immense," he said in a press release.
As has always been the case, Google did not give forward guidance to Wall Street.
That, coupled with Google's undeniable volatile price swings, is part of the price (good and bad) of owning shares in the cutting-edge company which has handsomely rewarded shareholders over the long-term, and should continue to do so.
For Robinson's full analysis of Google (Nasdaq: GOOG) stock, go here.
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