Alphabet Stock Sinks On Ad Revenue Jitters As Market Surges

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Investors punished shares of Google Tuesday after parent Alphabet came in light on revenue in its latest earnings – and even as Wall Street and media watchers lapped up welcome details on YouTube which had never been previously released.

Google revealed that YouTube ad revenue rose 31% in the fourth quarter to $4.7 billion. That likely represented a deceleration since full-year ad sales grew 36% to $15 billion.

“Overall, we were hoping for a bit more on the top line,” said Michael Levine of Pivotal Research. But he thinks the quarter “ticked off a number of critical boxes,” including the enhanced transparency.

Shares of Alphabet are were one of the market’s notable underperformers, trading down around 3% in a very buoyant market.

Management also noted that YouTube subscription and non-ad revenue, which is hidden in a segment called ‘Google other,’  at a $3 billion annual run-rate as of the fourth quarter. Executives also noted that YouTube Music and Premium have more than 20 million paid subscribers, and YouTube TV has more than two million.

Google earnings are always a primer on where advertising is flowing. YouTube ad revenue, as big as it is, is only small potatoes compared with Google.

Search revenue was $38 billion for the quarter and $135 billion for the year, up, respectively 17% and 16% from the year before. Growth in U.S. ad sales – which came in at $22 billion for the quarter and $75 billion during the year slowed 16%, Growth had also been higher in previous quarters.

Total ad revenue was $46 billion for the quarter and $162 billion for the year.

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