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points by nostrademons 14 hours ago | 0 comments
Their earnings missed by almost 30%, which is pretty huge in the stock market.

I think the bigger concern is that earnings misses are very rare for GOOG, and historically they've been able to hit almost any target that Wall Street expects. Their past earnings misses were all related to major macroeconomic events (2020Q1, which was the COVID shutdowns, 2022 all year with inflation from COVID/Ukraine + rate hikes, and 2019Q3 with the taper tantrum from Fed rate hikes), and most of them were more in the 5% range. A 30% miss, particularly with slowing revenue growth in their core business despite almost full monetization of commercial queries, could indicate that the golden goose is disintegrating.

For that matter, GOOG has been extremely correlated with macroeconomic indicators since about 2018, which means investors in the rest of the stock market should probably watch out. It's likely we're already in recession but don't know it.

[–] gniv 12 hours ago
> Their earnings missed by almost 30%, which is pretty huge in the stock market.

It's somewhat fake, as fake as last quarter's huge beat. It's basically due to their large share in SpaceX, which they have to mark to market at the end of the quarter. Anyway, that's not at all the reason for the freakout.

[–] andriy_koval 14 hours ago
> Their earnings missed by almost 30%

which exactly earning number missed by 30%?..

[–] nostrademons 14 hours ago
Earnings per share. Analyst expectations were for $3.01 and it came in at $2.12.
[–] andriy_koval 13 hours ago
Ok, this one happened because they invested into AI hardware build out. Actual operating income grew 30%+ q/q.
[–] JumpCrisscross 13 hours ago
> Actual operating income grew 30%+ q/q

OI isn’t more “actual” than EPS. I remember back when Yahoo traded for less than cash and liquids [1] because investors didn’t trust management not to blow it on stupid shit.

[1] https://www.nytimes.com/2015/12/10/business/dealbook/how-to-...

[–] andriy_koval 13 hours ago
google still highly profitable, so operation income indicates how healthy is business, and eps/net income indicates how agressively they reinvesting.
[–] JumpCrisscross 10 hours ago
Yes. But framing one as “actual” implies it conveys broad, ground truths better than the other metrics. It does not. The ground-truth metrics would be forward ROA and ROIC.
[–] andriy_koval 10 hours ago
> The ground-truth metrics would be forward ROA and ROIC.

that's not ground truth in environment when landscape (AI) dramatically changes every quarter, and investments are uncertain bets with huge win potential.

Your ground truth metrics are: 1. How healthy core business: operating income. 2. How aggressively company reinvest: net - operating income.

[–] epolanski 12 hours ago
That was already forecasted, but not that they were going so cash flow negative.
[–] andriy_koval 11 hours ago
Its just interesting how wall street views ant and google as the same caliber companies, even google has way more stronger baseline and ant is way more under the water.