Alphabet (GOOG) Stock Soars on Earnings Beat, Surpasses Apple as World’s Largest Company

Shares of the Alphabet Inc. (GOOG) were trading up +40.53 or +5.39 percent to $792.53 per share in Tuesday’s premarket after the company announced better than expected earnings for the company’s fiscal fourth quarter and full 2015 year yesterday after the market close. Alphabet Inc. stock closed at $752.00 per share, up +9.05 or +1.22 percent in Monday’s regular trading session.

Founded in 1998 by Sergey Brin and Larry Page, Mountain View, California based Google Inc. is an international Internet corporation best known for its search engine.
The company has been aggressively expanding into other information technology fields through acquisitions. In January of 2014, Google acquired Nest, a company that makes home appliances that connect to the Internet. Google had previously bought DeepMind and military robotics company Boston Dynamics. Other recent acquisitions include Skybox Imaging, Dropcam and Postini. Google’s largest source of profits comes from its AdWords online service. The service places ads at the end of Google’s search results.

For the fourth quarter Google’s parent company Alphabet posted revenue of $21.33 billion — an 18 percent increase over the same period one year ago — earnings for the quarter came to $8.67 per share. Analysts expected the company to report earnings of $8.10 on revenue of $20.8 billion for the fourth quarter.

The Google segment produced an operating profit of $6.8 billion on revenue of $17.1 billion after deducting ad commissions, which translates into an operating profit margin of 40 percent. This compares to Apple Inc. (AAPL), which reported a profit margin of 32 percent in its latest quarter. Nevertheless, the company’s “other bets”, or companies outside of Google also owned by Alphabet lost $1.2 billion on revenue of only $151 million.

For the full year, “other bets” showed a loss of $3.57 billion on $448 million in revenue, almost double the loss of $1.94 billion on $327 million in revenue in the previous year. The Google core business reported operating income of $23 billion, which more than made up for the comparatively small loss of the company’s other bets.

Ruth Porat, Alphabet’s Chief Financial Officer said in the company’s press release that, “Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we've been investing for many years. We're excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people”.

After the earnings release, Alphabet Inc. shares soared more than five percent in the aftermarket, and again in this morning’s premarket, bringing the capitalization of the company to $555 billion, surpassing Apple Inc.’s $533 billion based on its closing stock price on Monday. Apple Inc. has held the title of the world’s most valuable company since 2010, when it passed Microsoft.

With this morning’s premarket action, Alphabet has become both the world’s most valuable technology company, and overall, the largest company on the planet by capitalization. Alphabet stock will open at a new all time high as investors and the market show their enthusiasm reflected in the stock’s rally.

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Published on Feb 2, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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