Why Google stock dropped
Shares of Google parent Alphabet took a hit after the search engine giant reported better-than-expected fourth-quarter earnings after the closing bell Monday. What are Wall Street traders worried about?
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GOOGL | ALPHABET INC. | 167.63 | -8.35 | -4.74% |
“Ironically, I think what they are concerned about is the larger-than-expected capital expenditure that we’ve seen and obviously with no real sight,” said Transpire Ventures Managing Partner and tech analyst John Meyer to FOX Business’ Lauren Simonetti on Tuesday.
The tech giant said its capital expenditures grew 64 percent compared to last year, up to $7 billion. However, Meyer said that he is “extremely bullish” because long-term bets that Google is working on will help the company expand business beyond search.
“I’m very happy to see the amount of money that Google is putting into their more longer-term bets, which I think is really starting with Waymo, their self-driving car division,” he said. “They are going to tackle Uber, Lyft – the entire taxi industry, the entire car industry, because with Waymo they are betting on a future where Americans don’t even own cars anymore.”
In the meantime, their core and advertising businesses are seeing increasing competition from Amazon and Facebook. But in Meyer’s opinion, Google is succeeding at taking advantage of its position by expanding into areas that are not advertising.
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“The public is becoming more and more concerned about companies who have a business model that is based on selling, really your data, to other companies for the purpose of advertisers,” he said. “And I think Google is taking a step really away from that with some of their capex that we’ve see over the last 24 hours.”