Stock of the day 22/04/2015 – Google Inc

This big-hitter-heavy earnings week continues on Thursday, as the monolithic Google Inc announces its first quarter results amidst news of an EU investigation.

Since its stock split last April, Google hasn’t seen much of anything on the markets, at least not compared to the record breaking form of its rival Apple. The split saw it trade at a new price of $569.31, something that gradually fell over the rest of 2014 to end the year at $531.45. 2015 has been slightly better for Google; a quick foray to lows of $491.04 in the middle of January was completely pushed away by the start of March when the stock reached $581.72, its highest price since last September. However, this price slowly ticked down throughout March and April, with worrying news from the EU taking the stock to a current trading price of $542.


(Source: IT-Finance.com 22/04/2015)

With the EU Competition Commission accusing Google for violating antitrust laws to push its own shopping results, alongside an even more ominous inquiry into whether Google unfairly bundled apps to its devices in the process stifling rival mobile operating systems, there could be some big, and costly, problems on the horizon for the tech giant.

Yet Thursday will bring more pressing matters to the fore, namely any issues with the current currency headwinds. 56% of Google’s overall sales in the fourth quarter were international; in other words, Google could have a lot to worry about in regards the current strength of the dollar. The company lost nearly half a billion dollars in potential revenue last quarter due to the greenback; whether it will have such a severe impact in the first quarter remains to be seen.

Elsewhere, there will be plenty of eyes on Google’s core advertising business. This includes Google’s Sites and Network partner sites, aggregate paid clicks and most importantly its average cost per click figures. Whilst Google saw growth in all of the advertising areas last quarter, average cost per click decreased 3% year-on-year, a decline Google won’t want to turn into a trend this time around. There is also Google’s catch-all ‘Other’ category, which includes Google Play and its mobile hardware. Growth in this area decelerated from 50% to 19% between the third and fourth quarters in 2015; still strong growth, obviously, but another area that Google will want to prevent from slipping to nasty downward trend.

The biggest new announcement from Google is likely to be the unveiling of its US wireless service, as the company takes a few more steps into the telecom industry. What is so potentially exciting about this new Google service is that customers will only pay for the data they use instead of a fixed amount, adding an extra drop of heat to the already hot wireless price war in America.

With the results of the EU investigation a way away, analysts remain bullish on Google’s first quarter results, giving the stock a consensus rating of ‘buy’ with an average target price of $627.75.