HomeTechAlphabet Inc.’s (GOOGL) Advertisers Fear of Potential Recession Pulls Down Google’s Ad...

Alphabet Inc.’s (GOOGL) Advertisers Fear of Potential Recession Pulls Down Google’s Ad Sales

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Shares of Google’s parent company Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG) dropped more than 9% during Wednesday trading after it declares that as advertisers reined in spending and prepared for a future recession, Google’s corporate parent’s summer revenue growth slowed to its sluggishest pace since the pandemic rattled the economy more than two years ago.

In addition to Google, Alphabet also owns a number of smaller technological firms. On Tuesday, Alphabet reported revenue of $69.1 billion for the July-September quarter, a rise of 6% over the same period in 2017.

It was the first quarter since April through June of 2020 that Alphabet’s year-over-year quarterly sales increased by less than 10%. Due of the economic unpredictability in the early months of the epidemic the advertisers who were responsible for the majority of its earnings at the time drew back.

Even more drastically than Alphabet’s overall income, Google’s ad revenues declined. The $54.5 billion was generated by advertising that is a 2.5% rise over the same period last year. Another indication of tougher times is that YouTube’s quarterly ad revenues fell by 2% from the previous quarter, the first revenue decline for the video platform since Google started revealing its results in 2019.

Alphabet’s profitability were also negatively impacted by the downturn in revenue. The Mountain View, California-based corporation reported earnings of $13.9 billion, or $1.06 per share, a decrease of 27% from the same period in 2017. Both sales and profits per share missed FactSet-surveyed analysts’ predictions.

Following the release of the results, Alphabet’s shares fell by about 7% in extended trade. This year, the stock price has dropped more than 30%, wiping off approximately $600 billion in shareholder equity.

An analyst for Edward Jones, David Heger stated that online ad spending is clearly slowing more than they thought. It looks like it is going to be tough sledding for the next few quarters.

Sundar Pichai, CEO of Alphabet, referred to the situation as “uncertain” and said, “it is a point when you take the time to optimize the firm to make sure we are set up for the next decade of growth ahead” during a conference call with analysts.

As pandemic restrictions were relaxed last year and the economy was stimulated by government action, Google’s money-making machine, propelled by its market-dominating search engine, roared back, propelling Alphabet to a 41 percent increase in revenue last year that drove its stock price to new highs.