October 18, 2013
Google Stock Price Climbs In Response To YouTube’s Mobile Growth
Peter Suciu for redOrbit.com - Your Universe Online
Google Inc. shares were set to open at an all-time high on Friday morning, nearing $1,000 after the search giant reported an increase in mobile and video advertising. This helped drive quarterly revenue up 23 percent.
As a result, on Friday at least 10 brokerages raised their price targets on the stock to between $880 and $1,175, according to Reuters. Jefferies was on the high end, and bumped up the target price to 15 percent.
According to reports from Yahoo! Finance, analyst expectations suggested Google could report about $14.8 billion in revenue for the quarter and earnings of $10.35 per share. However, it was noted the search giant had missed Wall Street’s EPS and revenue expectations last quarter.
The big turnaround comes as more people are turning to mobile devices with Google-owned YouTube seeing a year-over-year increase on mobile. YouTube now sees about 40 percent of its traffic coming from mobile devices, which is up from 25 percent in 2012 and just six percent in 2011.
Google CEO Larry Page said this trend represents “great progress” in an earnings call with analysts. Page noted the company has made great strides in growing its mobile user base.
"Google had another strong quarter with $14.9 billion in revenue and great product progress,” Page added in a statement on the Google Investor Relations blog. “We are closing in on our goal of a beautiful, simple, and intuitive experience regardless of your device.”
Paid clicks were also credited to Google’s success, as these increased 26 percent in the quarter that ended September 30, up from a year earlier. This is the highest rate of growth in the past year, and it also offset an eight percent fall in average cost-per-click – the price ad buyers paid the search giant when consumers click on their ads.
“We view solid paid clicks growth to be a good indicator of demand, driven by the continued shift to mobile,” JP Morgan analysts told Reuters, adding there had been an expected 21.5 percent growth.
Google’s earnings, which are the first of several tech giants, could be the one to beat. Yahoo, which reported a far more moderate quarter, had seen a market share decline in display and search advertising due to increased competition from Google and Facebook.
The social network is expected to report its third-quarter results on October 30.
All of these major players in online ads are also looking heavily into mobile, noted TechCrunch in a report.
“To put its transition in perspective, Facebook said it had 819 million monthly mobile users (73 percent) out of its total 1.15 billion users in Q2 2013, up from 543 million (56 percent) of 955 million in Q2 2012, 325 million (43 percent) of 739 million in Q2 2011, and 155 million (32 percent) of 482 million in Q2 2010,” wrote Josh Constine for TechCrunch. “Note these people used Facebook mobile at least once, but may also have used desktop.
"Facebook doesn’t share what total percentage of usage on its site comes from mobile, but 41 percent of its ad revenue comes from phones and tablets, up from 30 percent in Q1 2013, 23 percent in Q4 2012, and 14 percent in Q3 2012,” Constine wrote.
YouTube, which formed a mobile team in 2007 – even when there was little demand for video on handheld devices – has been hard at work to ensure that it is a player in the mobile space. It transcoded all videos to be able to be served on mobile formats; and recently the video-sharing website announced plans it would allow users to save and watch videos offline starting in November.