With the shares up 27% this year, expectations for Google’s parent company Alphabet were understandably high. So possibly, with revenue up 21% to $26.01 billion and a beat on earnings per share, $5.01 vs expectations of $4.46 you would have expected the market to take this positively.

Unfortunately even though the headline figures were impressive, if we dig a little deeper in the earnings we can see a concerning trend : From the area I class as the company’s core business – its advertising unit we can see that the amount prospective advertisers pay for users for advertising to their website has declined by 23% – much higher than had been forecast. This also comes from an area in which Facebook has issues in previous years, notably desktop verses mobile traffic – this reporting period  the search traffic has increased from mobile devices phones – importantly, this make up a smaller cost of ads versus desktop traffic.  This result I suspect now will firmly be on Google’s agenda : the transition of users from desktops to mobile is a trend I can only see increasing, dramatically going forward.  To confirm this area of contention, stock is trading down in the pre-market: approx. 3% at $973.

Good luck,

Jordan Hiscott, Chief Trader

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