Google
Among the 'FAANG' stocks, Google was initially the worst performer during the pandemic as travel companies were major buyers of ads in addition to small businesses. The company actually recorded its first revenue decline on a year-over-year basis in its company history. However, this turned out to be a temporary development as shares have outperformed the broader market and its peers with a 64% YTD gain.
Inside the Numbers
In Q3, Google reported earnings per share of $27.99, topping expectations of $23.48 per share. Revenue came in at $65.12 billion, also higher than expectations of $63.34 billion. In total, it was a 70% increase in EPS and a 41% jump in revenues.
YouTube ad revenue was the one segment negatively affected by the Apple privacy change and results fell short of expectations at $7.20 billion vs. $7.4 billion. Google Cloud revenue was in-line with expectations at $5 billion, a 45% increase.
Overall, ad revenue increased 43% to $53.1 billion with YouTube ad revenue, gaining more than 30%. The company said that ad spending from retailers was particularly strong. The company has also been under less regulatory scrutiny than peers like Amazon
It should also continue to benefit from the economy reopening, the travel sector returning to full capacity, and continued growth in ad spending. However, the company looks to modestly increase spending, including on Google Cloud. It added 6,000 employees in the quarter and planned to continue adding over the next year.
Stock Price Outlook
Google's growth is astounding, especially at its size. The company is beginning to reap dividends from bets like the ChromeOS, Google Cloud, YouTube, and Android.
Further, Google ads remain the best way for businesses to reach customers, and this is even more true with Facebook losing its grip on certain demographics.
Therefore, investors shouldn't hesitate to add Google to their portfolio despite its already hefty, YTD gains.
