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Alphabet’s third-quarter results plummet as giant struggles to compete with TikTok | Alphabet


Alphabet’s third-quarter revenue fell below analysts’ expectations, it said on Tuesday, as it continues to struggle an industry-wide technological slowdown.

The company reported third-quarter revenue of $69 billion, up 6% from a year ago but below analysts’ estimates of $70.9 billion. Like many tech and social media companies, Alphabet is struggling to compete with TikTok amid the broader economic downturn.

“YouTube’s growth has once again slowed amid fierce competition from TikTok and other players in the video streaming space,” said Jesse Cohen, senior analyst at Investing.com. “Alphabet is being negatively impacted by worsening macroeconomic headwinds, such as soaring inflation and worries about a possible recession.”

Chief Executive Sundar Pichai said in a statement that Alphabet is “honing [its] focus on a clear set of product and business priorities,” including new ways to monetize YouTube shorts and search and cloud improvements.

Shares fell more than 5% in after-hours trading as the misstep added to lingering worries about the impact of recession fears and other macroeconomic headwinds. The mistake comes after smaller rival Snap’s poor results sparked inflation fears in the tech sector and temporarily wiped out $40 billion in market capitalization.

Ad spending tends to slow during economic downturns, and Alphabet’s disappointing results show it’s not immune to such challenges, experts said. Google’s advertising revenue came in at $54.5 billion in the third quarter, down from $53.1 billion a year ago, but fell short of analysts’ expectations.

“Despite being considered one of the most isolated companies in the advertising space relative to its peers, Google’s poor quarter is the latest sign that deteriorating fundamentals and a challenging macro environment are prompting advertisers to reduce their expenses,” Cohen said.

The report comes as the tech sector deviates from years of gains throughout the pandemic. Alphabet announced in August that it would slow and even freeze hiring in some departments. Microsoft also reported earnings below expectations on Tuesday, with earnings down 14% for the July-September quarter from the same period last year.

With the slowdown underway, investors will be watching other tech giants closely this week, as Meta, Amazon, Apple and Uber will also share their results in the coming days.

Reuters contributed to this report

theguardian

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