Mediocre ad revenue sees Google shares slide
SHARES in Google owner Alphabet tumbled last night as its sales disappointed investors.
Despite raking in sales worth £28.1bn during the first three months of 2019, shares in the tech giant slumped by more than 5pc in after-hours trading.
Alphabet, which also owns YouTube, posted a 17pc rise in sales compared with a year earlier. But analysts had expected the group to make £28.9bn during the period.
It also suffered a £1.3bn hit relating to a fine from Europe’s competition watchdog after it was accused of squeezing out advertising rivals. Profits fell from £7.3bn to £5.1bn as a result.
It came as Wall Street analysts said Google has nothing to fear from Amazon’s bid to steal its advertising business. The search engine is facing growing efforts by Amazon to win market share in a battle between the US tech titans. But analysts said the raid has not yet had any effect.
Dan Ives, of Wedbush Securities, said: ‘The bark is worse than the bite. It’s an opportunity for Amazon from an advertising perspective, but I don’t see it moving the needle too much for Google.’
Amazon’s advertising takings have been growing rapidly. The company said sales from its ‘other’ businesses – largely ads – more than doubled to £7.8bn in 2018.
And in the first quarter of this year it reported sales of £2.1bn, a rise of 34pc.
The growth has prompted suggestions Amazon could challenge the vice-like grip Google and Facebook have over online ad sales, with the pair estimated to control nearly 60pc of the market between them. Amazon is thought to control around 8pc.
But Colin Sebastian, an analyst at Baird Equity Research, said: ‘The ramp in Amazon advertising is having limited impact on core Google search spend.’