Google reports huge earnings
Revenue was up 42% year over year, mostly from the differential between foreign currencies and the US dollar. Marketing on Google Adwords, the main component of Google’s earnings, looks cheap to firms located overseas. Foreign companies now have an advertising advantage against US competition, this works well for Google. International businesses and advertising now accounts for the majority of Google revenue, sitting at a perfect 51%.
This looks optimistic for Google which is in a great position to profit from currency differentials. Even with a weakening dollar, consumers are still consumers, and as such spending has grown considerably. The stimulus package and new Fed mandates are infusing the economy with tons of cash, creating consumers and an inflated currency; both of which play to Google’s favor.
While Google made some tremendous gains in earnings, theres still a lot to look out for in the name of technicals. Google’s stock will now have to win over the resistance line that was once its forever support line, a movement back above this line will be difficult, I’m sure many traders have it set as the exit point.
Recent momentum does create a lot of gravity as well. There were plenty of investors that went long at $420-$440 who will now be dumping those positions. These huge gains will be pared by profit-taking as the company settles down. A 42% increase is great to see, but you have to figure that Google was estimated by analysts to be growing at a 50% rate. Considering this, you could make the case that Google’s growth is slowing. Either way, for the long term Google looks on the up and up.