Start the conversation
Google Inc. (Nasdaq: GOOG, GOOGL) reported Q1 earnings per share (EPS) today (Wednesday) of $6.27 on revenue of $15.42 billion. Those figures were down from consensus estimates of $6.33 EPS on revenue of $15.58 billion.
News of the earnings miss sent Google shares down 6% in after-hours trading.
While the numbers fell short of analysts' estimates, they were up from the previous year. Q1 EPS was almost 5% higher than in 2013, and the company saw its revenue increase 19% from last year.
Still, the growth is lower than most expected.
Another area of concern for shareholders was Google's "paid clicks." In Q1, Google reported that paid click revenue increased by 26% from the previous year. That growth was down from Q4 when Google reported a paid clicks increase of 31%, year over year. Moreover, paid click revenue actually decreased 1% from 2013 Q4 to 2014 Q1.
Note: One of the only things that has been consistent about the markets in 2014 is volatility. So we've outlined how to find profits in a volatile market – like triple-digit gains in just days – if you start with this strategy…
Another number investors were watching was "cost-per-click" revenue generated from advertising, which fell 9% this quarter. While that was in line with Google's fourth-quarter results, a loss of 9% is uninspiring. Revenue generated from cost-per-click has been steadily declining for several years.
Following today's disappointing earnings miss, here's what investors can expect moving forward…
Earnings Impact on Google (Nasdaq: GOOG) Stock
The Q1 earnings report today took on added meaning as the technology sector finds itself in the middle of a six-week sell-off. The Nasdaq Composite has dropped more than 6% since reaching a high of 4,371.71 in early March. That was the highest the index has been since the "dot-com" era of the early 2000s.
Google stock enjoyed a short-term run-up following its highly publicized stock split last month, but shares have been hit hard during the recent tech sell-off. GOOG has slipped almost 7% in the last month, while GOOGL shares are down 5%.
Following the earnings miss, shares of GOOGL and GOOG both slipped 6% after-hours.
The earnings miss is big for Google, which has been trying to rebound from the recent tech sell-off. A strong earnings report highlighted by advertising revenue growth would have gone a long way toward the stock regaining momentum.
For tech investors who were already nervous about Google stock, today's report is even more unsettling. Shareholders should expect Google's slide to continue in the short term as more nervous investors react to the news.
Additionally, the Google's earnings could have ripple effects through the whole technology sector.
Google and Yahoo! Inc. (Nasdaq: YHOO) were the first two major tech companies to report Q1 earnings. Yesterday, Yahoo reported EPS of $0.38, which beat estimates by $0.01. However, revenue for Yahoo slipped 1% to $1.13 billion. The stock didn't falter despite the lackluster report, as financial information from the Chinese firm Alibaba lifted the stock.
As one of the biggest momentum stocks names in the Nasdaq, today's miss may be reflected short term in the overall tech market.
Do you invest in Google? What are your projections for Google's Q1 earnings report? Let us know on Twitter @moneymorning using #Google or $GOOG.
No investor has to suffer the ravages of a bear market if they're properly prepared. Here's a map for navigating a bear market that will turn your fears into profits…