Google shares surge as mobileadrevenuesoars
GOOGLE’s shares surged as much as 15.7 percent on Friday, adding nearly $63 billion (R778bn) to its market value, as strong growth in mobile ad revenue allayed concerns its YouTube business could be hurt by Facebook’s push into video.
The surge in the stock, which sent the Nasdaq composite index to a record intraday high, came a day after Google reported better-than-expected revenue and profit for the first time in six quarters.
Google’’s share price rise added more to its market value than the combined market capitalisation of Twitter and LinkedIn.
Shares of Google, the world’s most valuable company after Apple, hit a record high of $696, valuing the web search giant at about $466bn.
At least 27 brokerages raised their price targets on Google’s stock by as much as $150 to as high as $800, with analysts also welcoming new chief financial officer Ruth Porat’s emphasis on disciplined spending.
At the highest price target, Google will be valued at $545bn. Apple was valued at about $740bn as of Thursday’s close.
“She (Porat) is known to be tough as nails when it comes to expense management and I think the first quarter off the back, she is delivering,” FBN Securities analyst Shebly Seyrafi said.
Online video ads could be a $17bn opportunity in the US alone by 2017 and YouTube looks best positioned to benefit, Jefferies & Co analysts wrote.
Google said watch time for YouTube rose 60 percent in the second quarter and the video service roped in more viewers aged 18-49 than any US cable network on mobile alone.
Google and Facebook are trying to woo big companies to market their products via online videos.
YouTube had an edge over Facebook as it had a more mature monetisation platform that seemed to attract the best content, Piper Jaffray analyst Gene Munster said.
Google said the gap was closing between mobile and desktop “cost per click” (CPC), or the average price of online ads.
Mobile CPCs were likely to exceed desktop CPCs in the long term, Munster said. – Reuters