- Google-owner posted rare misses in Q1 and Q2
- Stock is down more than 30% in 2022
- Q3 updates have largely been better-than-feared
Cost-of-living pressures are starting to hurt global growth and investors will be closely watching third-quarter earnings from Google-owner Alphabet (GOOG:NASDAQ) after the market close on 25 October for signs of slowing online advertising.
Recent soundings are not encouraging. Last week social media platform Snap (SNAP:NYSE) had its share price hammered after warning that fourth-quarter revenue would likely be flat on last year because of an anticipated slowdown in digital advertising. Shares in the Snapchap-owner plunged 28% to $7.76, lows not seen since long before the pandemic.
The news sent shockwaves through the sector. Snap doesn’t have anything like the ads scope of Alphabet, and the latter’s share price, having initially fallen on Snap’s warning, has since rallied. Yet the stock is still more than 30% down on where they started the year.
Analysts taking the knife to forecasts and share price targets haven’t helped - JP Morgan toned its Alphabet price target from $140 to $136 last week.
CAN ALPHABET BEAT THE STREET?
That said, third-quarter earnings season so far has been better-than-feared after results from companies including Goldman Sachs (GS:NYSE), Bank of America (BAC:NYSE), Netflix (NFLX:NASDAQ) and Johnson & Johnson (JNJ:NYSE) boosted sentiment.
After rare revenue and earnings misses in Q1 and Q2, it could be argued that Alphabet expectations are already set low, promising hope that investors could be in for a positive surprise this week. Consensus is pitched at $1.28 per share of earnings on $71.34 billion revenues.
That compares to 2021 Q3 figures of $1.40 on $3.26 billion, recalculated for February’s 20-for-1 stock split. Q4 estimates stand at $1.40 and $80.52 billion.
