The company hopes to continue its growth amid increasing competition with Amazon
Google will be the most prominent company to release its results on Thursday after market hours. Investors will be paying close attention to the search giant’s performance with battles raging on multiple fronts with rivals Amazon, eBay and Apple.
Search remains the largest source of revenue for the company so the numbers for paid clicks and cost per click will be the first to be mentioned. Although there is a long-term downtrend in how much they bring in, both are expected to improve this quarter with growth from Japan, India and the UK. The success of Product Listing Ads (PLA’s), that started the direct entry of the company in the e-commerce area a year ago, will also attract attention as they are directly competing against eBay’s Marketplace and Amazon’s core business. eBay report their results after close today and bad numbers could be perceived as good ones for Google tomorrow.
Online shopping is definitely in the crosshairs of the company, but they do know that someone has already established a foothold. Eric Schmidt, their executive chairman, said recently “Last year almost a third of people looking to buy something started on Amazon – that’s more than twice the number who went straight to Google.” He even went on to describe them as “..our biggest search competitor. People don’t think of Amazon as search, but if you’re looking for something to buy, you are more often than not looking for it on Amazon.”
This charge was highlighted with yesterday’s news that Google Shopping Express will be available in six more cities across the US and is now pitted directly against Amazon’s same-day delivery service. The two companies are fighting not only for the consumer dollar, but for the all-valuable behaviour and spending information, which placed in the context of big data has great value.
YouTube and mobile ads will also come in the spotlight, although they account for only 8% and 17% of company revenues. But as the company shifts to become an advertising giant and one whose services are accessible at all times with smart devices, these numbers are expected to increase. Google also hope that the PLA’s will help them by tapping into what is still a relatively new market and simultaneously taking a share from what Facebook and Apple are already making.
Google’s stock price has almost doubled since 2012 with analysts and corporate investors almost unanimously positive in their predictions with only buy or hold ratings. Many expect an attempt to pass the $600 level soon (the current price is $532.8), but downside risks still remain with large sums being spent on infrastructure to support their current businesses, as well as cloud and enterprise services.
All this diversification isn’t bothering investors, but they will be checking for signs of both continued growth and the risks ahead. With an average change of 6.25% after they report their quarterly results, this earnings report from Google also promises to be an interesting one.