Why Alphabet Inc Class C (NASDAQ: GOOG) stock is under pressure

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Alphabet Inc Class C (NASDAQ: GOOG) stock lost over 3.8% in the pre-market session of February 4th, 2020 (Source: Google finance) as the company has missed the revenue estimates for the fourth quarter of FY 19. In 2019, YouTube had reached $15 billion in ads revenues, which represents the growth of 36% compared with 2018. The company now has over 20 million music and premium paid subscribers and over 2 million YouTube TV paid subscribers ending 2019 at a $3 billion annual run rate in YouTube subscriptions and other non-advertising revenues. Google Cloud ended 2019 at a more than $10 billion run rate, which is up 53% year-on-year due to significant growth in GCP. The growth rate of GCP was significantly higher than that of Cloud overall and GCP’s growth rate accelerated from 2018 to 2019. The company is looking forward to acquire Fitbit, which will add strong capabilities in wearables and advance the vision of ambient computing for the Android ecosystem.

Moreover, the company incurred the cash capex of $6 billion during the quarter. The company has generated the operating cash flow of $14.4 billion with free cash flow of $8.4 billion. The company has ended the quarter with cash and marketable securities of approximately $120 billion

GOOG in the fourth quarter of FY 19 has reported the adjusted earnings per share of $15.35, beating the analysts’ estimates for the adjusted earnings per share of $12.49, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 17 percent to $46.08 billion in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $46.94 billion. The revenue grew due to ongoing strong performance in Search, YouTube and Google Cloud, which is offset by a decline in hardware revenues

Furthermore, Google Search and other advertising revenues up 17% year-over-year to $27.2 billion in the quarter, due to ongoing momentum in mobile and desktop. YouTube advertising revenues were up 31% year-over-year to $4.7 billion, on the back of substantial growth in direct response and ongoing healthy growth in brand advertising, which remains the largest component. Network advertising revenues were up 8% year-over-year to $6 billion, due to growth in Google Ad Manager.

Additionally, in the fourth quarter, the company had repurchased $6.1 billion of shares, which was more than double the amount of repurchase in the fourth quarter of 2018. As of end of the year 2019, the company had $21 billion remaining in the program.

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