Alphabet Stock Dips on Analyst Concerns Ahead of Quarterly Earnings

Published January 17, 2024

The stock of Alphabet, the company that owns Google, experienced a drop of up to 2.5% during early trading on Wednesday before leveling out to a close of a 0.8% decline. This downward movement was driven by a pessimistic analyst report forecasting the company's performance as we approach the release of Alphabet's fiscal fourth-quarter financials.

Aggressive Estimates Questioned

Analysts from Evercore ISI cautioned clients by placing Alphabet shares on their Underperform List, positing that the expectations set by Wall Street for the company's operating margins and income for the quarter might be excessively optimistic. They cite usual end-of-year slowdowns and new expenses from the NFL's Sunday Ticket as the main reasons for their skepticism.

Alphabet's YouTube arm secured a significant deal worth approximately $2 billion annually, spanning seven years, granting it the exclusive rights to stream NFL's Sunday Ticket starting with the 2023 season, leading to a full quarter's worth of costs reflected in this upcoming report.

The Path Ahead for Alphabet

Alphabet has not given explicit forecasts for its fourth-quarter performance, but during October's earnings call, CFO Ruth Porat indicated a robust investment strategy with a focus on profitable growth. This next report will bring in the first comprehensive set of revenues and costs associated with the NFL deal.

However, expectations from many analysts point towards a 12% increase in revenue and a 51% boost in earnings per share. Whether Alphabet will meet or fall short of these predictions will become clear when the company publishes its fourth-quarter results on January 30, 2024.

Alphabet, Stock, Earnings