The war in Ukraine also hit YouTube ad sales

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Alphabet Inc., Google’s parent company, reported on Tuesday the first quarterly revenue loss since the pandemic, as the war in Ukraine hit ad sales in YouTubeupsetting investors.

The largest video platform on the internet has recorded big profits in the last two years, as the pandemic forced more stores, but also consumers to be more active on the internet. However, trying to surpass the sales made in the last two years and achieve higher sales targets is proving difficult this year of the war, as rising inflation and product shortages are forcing advertisers to abandon product promotional campaigns, according to analysts.

Ruth Porat, Alphabet’s chief financial officer, said it was too early to predict whether sales had slowed since the war. He warned that the strengthening of the US dollar could hurt the sales process even more during the current quarter.

Alphabet’s share price has risen about 90% in the last two years, while it has fallen by about 2.5%, after the announcement of the results late yesterday, Tuesday. The price of shares decreased by 3.6% during the stock trading.

David Wagner, head of equity portfolio management (Aptus Capital Advisors), has expressed growing concerns about the macroeconomic environment. “Alphabet is considered one of the most protected companies in the advertising market compared to other companies in the same industry, but sometimes it is possible to own the best house in the worst neighborhood,” he said.

Alphabet said first-quarter sales rose to $ 68.01 billion (€ 63.88 billion) up 23% from a year earlier, but lower than the average estimate of $ 68.1 billion (€ 63.97 billion) by financial analysts (Refinitiv). This is the first loss of financial valuation for Alphabet since the fourth quarter of 2019.

The YouTube ad sales were at $ 6.9 billion (€ 6.48 billion) compared to analysts’ estimates for sales of $ 7.5 billion (€ 7.04 billion), according to FactSet.

Porat said the war in Ukraine, which began during the quarter, had a “huge impact” on YouTube revenue, as the company stopped selling ads in Russia, but brand advertisers, mostly in Europe, withdrew. their expenses after the outbreak of war.

In total Google had a sales gap of 1% in Russiacompared to 2021, as stated by Porat.

Google’s revenue from other sources, such as applications, electronics sales and subscriptions, stood at $ 6.8 billion (€ 6.39 billion), compared with a forecast of $ 7.3 billion (€ 6.86 billion).

Quarterly earnings were recorded at $ 16.44 billion (€ 15.44 billion) or $ 24.62 (€ 23.13) per share, compared to estimates for earnings of $ 25.76 (€ 24.20) per share.

Alphabet also announced that its board of directors has authorized the allocation of $ 70 billion (€ 65.75 billion) of funds to repurchase shares. Shares worth $ 81 billion (€ 76.08 billion) have been repurchased over the past two years.

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