Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) the stock is worth $ 1 trillion again – and that’s not good news.
Before the profit came out yesterday (after the close of trading), the internet search giant was trading at around $ 1,500 a share and took a share with a market capitalization of $ 1.05 trillion. Today, investors are selling the stock – still down 4.5% from 1:30 pm EDT – and Google’s parent shares are back at the $ 1 trillion level.
And yet the Alphabet didn’t even lose profits yesterday. Dan beat.
Analysts were predicting that the Alphabet would earn only $ 8.21 per share on a $ 37.4 billion sale. The Alphabet beat those numbers by a stick, earning $ 10.13 on a $ 38.3 billion sale.
So why is the stock today? Well, for one thing, that entry that “overcame” that the Alphabet reported last night was kind of Piriku. Yes, on the one hand, it was better than expected. But it still represented a 2% drop in Q2 revenue last year – the first time it has an Alphabet always reported a decline in its business revenue.
Similarly the number of earnings. The Alphabet beat earnings, but did so by reporting a 29% lower GAAP profit in Q2 2020 than it recorded in Q2 2019.
However, I don’t trust Alphabet Among all the bad news, there was also good news to report. Google search revenue may have declined, but YouTube pub revenue increased by 6%. Alphabet’s cloud computing business also, though nowhere near as close as some of its rivals, gained 43% more in the quarter.
Meanwhile, despite GAAP earnings gains, with operating money rising and capital spending declining, Google generated a stellar $ 8.6 billion in positive free cash in the quarter – 23% before net income reported and up to 32% year on year.
Trading about 32 times around the free cash flow now, the stock of the Alphabet may not be cheap, but it is still an enterprise that makes immense profit in cash, and is rapidly growing its cash.