Google’s Q4 ad sales rise again, parent plans to split stock

The results announced on Tuesday underscore how technology giant It has adapted to become even more successful during the nearly two-year pandemic that has hit the economy a lot.

In a show of confidence in its intention to make its shares more affordable, Google parent Alphabet also announced plans for its first stock split since 2014. If approved, the proposed 20-for-one split would reduce the price for each share Alphabet holds this July. Market value remains intact. Alphabet’s stock gained nearly 9% in extended trading after the news surfaced.

Google faltered in 2020 during the early stages of the pandemic, leading to a year-over-year decline in quarterly revenue.

But as government-imposed lockdowns pushed people to order more takeout and shop more online, Google’s leading online advertising network became an even greater magnet for merchants trying to connect with consumers stuck at home. Was doing. “It’s more important than ever to help them thrive,” Alphabet CEO Sundar Pichai told analysts during a conference call.

In the October-December period last year, Google grew ad sales by $61.2 billion, a 33% increase over the same period last year.

As always, the bulk of Alphabet’s profits came from Google’s advertising business. The Mountain View, Calif., company earned $20.6 billion, or $30.69 per share, well above the average estimate of $27.66 per share for analysts surveyed by FactSet Research. Revenue rose 32% from the prior year to $75.3 billion, eclipsing analysts’ forecasts for revenue of $72.3 billion.

The impressive numbers pushed Alphabet’s share price closer to $3,000 in extended trading. If the stock is still hovering around that price at the time of the proposed stock split, the shares will be reset to about $150 per share for a 95% cut. But Alphabet’s market cap, now approaching $2 trillion, will remain unchanged as the number of shares outstanding will be 20 times higher than it is now.

Lowering the per-share price of Alphabet’s stock could set the stage for the company to join the Dow Jones Industrial Average, as predicted by CFRA Research analyst Angelo Zino. That’s what happened to Apple in 2014, shortly after the iPhone maker executed a seven-for-one stock split.

In 2021, Google’s ad revenue exceeded $200 billion for the first time in the company’s 23-year history. Last year’s $209.5 billion in ad sales represented a 55% increase from the $134.8 billion posted in 2019 – the last full year before the pandemic changed everything.

In a change from recent quarters, ad growth on Google’s YouTube video service lagged slightly behind overall gains in the business. In the most recent quarter, YouTube’s advertising revenue totaled $8.6 billion, a 25% increase from the prior year. For the whole of 2021, YouTube invested $28.8 billion in advertising, nearly double its run for 2019.

Google’s prosperity has made it a target for both regulators and lawmakers, who believe the company is abusing the power of its popular search engine and other services like Maps, Gmail and the Chrome browser to unfairly trample on it. Some of those claims are being aired in a series of antitrust lawsuits filed in 2020 by the US Department of Justice and the state attorney general.

Several states are also suing Google over allegations that it covertly shadowed its users to help sell ads, even though they changed privacy settings to prevent location tracking, a situation that first appeared in the US. was reported by the Associated Press in 2018.

Google denies any wrongdoing and is fighting legal actions that could reduce ad sales in the future.