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Google Stock Dives as Earnings Report Released Early

By - Source: Google | B 17 comments

Google's had a bit of a bumpy afternoon.

Google yesterday joined the slew of companies releasing earnings reports this week with results for the quarter ended September 30. However, the company's results were accidentally released early with some pretty serious consequences.

According to MarketWatch, Google was planning to release its results after the market closed, but an early version of the report, found in an 8-K SEC filing, was released at around lunchtime. Stock was trading at around $755 at the time of the report's release but took a dive, dropping as low as $676 per share in the hours that followed. Google actually halted trading for more than two hours this afternoon in an effort to help things settle down.

Revenue was $14.1 billion compared to $12.21 billion last year, however, Google's GAAP net income for this quarter was $2.18 billion compared to $2.73 billion for the same period last year. GAAP earnings per share were posted as $6.53 EPS (333 million diluted shares outstanding) compared to $8.33 EPS for the same period last year (327 million diluted shares outstanding). 

For the full earnings report, click here.

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  • 17 Hide
    alidan , October 19, 2012 11:39 AM
    wait... so google pulled in a profit, but because it wasn't as big of a profit as last year, everyone decided to bail out of the company?

    is the stock traid retarded or something? or am i just not seeing the big picture?
Other Comments
  • 17 Hide
    alidan , October 19, 2012 11:39 AM
    wait... so google pulled in a profit, but because it wasn't as big of a profit as last year, everyone decided to bail out of the company?

    is the stock traid retarded or something? or am i just not seeing the big picture?
  • 1 Hide
    EDVINASM , October 19, 2012 11:46 AM
    Either someone's head will roll or this is just a well thought of exercise.
  • 5 Hide
    ivanto , October 19, 2012 11:51 AM
    The stock price was trading at the price point of assumed earning. On the stock market, share price reflects forecasted future earnings and future losses. So any news about not matching either the loss or income impacts the stock price to sinck or fly. Makes sense?
    -IvanTO
  • 0 Hide
    nieur , October 19, 2012 12:13 PM
    was result that bad considering more than 10% dive in stock price?
  • 0 Hide
    jacobdrj , October 19, 2012 12:48 PM
    nieurwas result that bad considering more than 10% dive in stock price?

    Considering that they made over 21% less profit... yeah...
  • 0 Hide
    abbadon_34 , October 19, 2012 12:51 PM
    the real story is more complicated . the real financial news included some technical errors, autotrading, 25th anniversary of black friday, etc.

    tom's is a computer site, not a car site. not financial site, not whatever else they might try
  • 1 Hide
    alidan , October 19, 2012 12:57 PM
    ivantoThe stock price was trading at the price point of assumed earning. On the stock market, share price reflects forecasted future earnings and future losses. So any news about not matching either the loss or income impacts the stock price to sinck or fly. Makes sense?-IvanTO


    not really, because i see stocks also go up and down because of small announcements outside of profit. i mean sure, i expect to see some amount of change depending on how much money they make, but im willing to bet money that if the stocks didn't stop trading it would have lost a hell of alot more than about 10%

    all over it pulled in 800 million less in profit from last year. still made over 2 billion... that's what i don't get.

    but i can assume that google stock isnt something most people have much if any of, its more for people who have crap tons of money, so all them trying to pull out at the high number, lead to it going lower. if you pulled out at the right time, you could have made an absolute crapton of money. as of right now its at 695$ so im going to assume that the stock price is going to go way up again as people try to get back in on it when its low... if its anything like before, it will return to around its previous value in about a month if not sooner, meaning anyone who pulled out fast enough and re invested stands to make about 80$ per share.

    the more i think about it the more i can see the chain reaction happen, i still thing its stupid, but i am understanding it a bit more now.
  • 0 Hide
    wemakeourfuture , October 19, 2012 12:59 PM
    alidanwait... so google pulled in a profit, but because it wasn't as big of a profit as last year, everyone decided to bail out of the company? is the stock traid retarded or something? or am i just not seeing the big picture?


    You're not seeing the big picture. I have been following Google stock from IPO to now and told someone who has very little shares (but shares none the less) to sell before this quarters earnings. The stock has been on a fantastic run the past several months and the earnings would not keep up with the accelerated stock price.

    Its not about making just a profit that matters. There's many factors to consider. There's expected profits and revenue. There's margins, costs to consider.

    Another key metric is the rate of growth of revenue and profits.

    Example. Company X made 10 million in profits in Year #1.
    Company X made 20 million in profits in Year #2. This is great, profits exist and increased 100%
    Company X made 21 million in profits in Year #3. Profit still existed, by why did profits only increase $1 million over the previous year? Why did profits only rise 5% this year. All sorts of factors could be at play. This could really drive down the stock price, but if this was expected, understood and priced into the stock price the price may not move on this news.
  • 0 Hide
    noblerabbit , October 19, 2012 1:44 PM
    here cometh dotcom bubble redux. Sell Apple yesterday, it will be too late today.
  • 0 Hide
    Kami3k , October 19, 2012 2:22 PM
    The stock market is like a women during menopause it seems.
  • 0 Hide
    kanoobie , October 19, 2012 3:50 PM
    Didn't see this mentioned here: Google recently bought Motorola (mostly for patents) and most of the losses on Google's books are a result of Motorola's poor quarter 3 performance.
  • 0 Hide
    srhelicity , October 19, 2012 4:57 PM
    alidanwait... so google pulled in a profit, but because it wasn't as big of a profit as last year, everyone decided to bail out of the company? is the stock traid retarded or something? or am i just not seeing the big picture?


    GOOG's stock price has risen ~20% since June and since last October. The price action on a stock is not only a function of actual earnings, but it's also affected by EXPECTATIONS. If this weren't true, the stock wouldn't have risen so much (20%) so quickly. This should be obvious, since everyone who trades is trying to "pick" the right stocks before everyone else does. As a result, stocks are bought on the expectation that certain financial indicators will be met. For example, if I expect GOOG to have a blockbuster quarter that will result in increased value (on a P/E or PEg basis, for example), then it's prudent to buy the stock NOW before the blockbuster quarter becomes official. Unfortunately, if a lot of people/institutions do that, and the expectations aren't met, then it tends to be sold off.

    Of course, "long term" investors don't necessarily need to worry about this. It's hard to argue that "buy and hold" is always the best strategy, however, when the NASDAQ is still below the 2000 highs. It's about WHEN you buy and sell, and you need to know when to sell, even if you are a long-term investor.
  • 0 Hide
    dalethepcman , October 19, 2012 6:31 PM
    The way I read it. Google made 2B more profit, but had 2.8B higher costs. Still does not explain the 20% stock drop. As always with wall street, markets will be manipulated by those with the biggest piggy banks to play with, and since the wonderful invention of the 401k, average Joe eats the losses.

  • 1 Hide
    svdb , October 19, 2012 7:17 PM
    Wall street has become a complete failure compared to what the stock market was initially intended for: to allow investor to invest in your business. Today it's only a tool for investors to invest in themselves using someone else's money.
  • 0 Hide
    wemakeourfuture , October 20, 2012 1:08 PM
    dalethepcmanThe way I read it. Google made 2B more profit, but had 2.8B higher costs. Still does not explain the 20% stock drop. As always with wall street, markets will be manipulated by those with the biggest piggy banks to play with, and since the wonderful invention of the 401k, average Joe eats the losses.


    What was the expectation for the stock, revenue, cost, profit? What was the guidance (if any) that Google had given previously for this quarter? We're there larger write-downs? Was margins affected. Did the run up in stock price suggest accelerated earnings? Was guidance given and lowered?

    Why not spend the time to read about the price mechanisms for stock prices instead of spending time writing about a topic you clearly don't understand publicly on a forum?
  • 0 Hide
    alidan , October 21, 2012 3:52 AM
    wemakeourfutureYou're not seeing the big picture. I have been following Google stock from IPO to now and told someone who has very little shares (but shares none the less) to sell before this quarters earnings. The stock has been on a fantastic run the past several months and the earnings would not keep up with the accelerated stock price.Its not about making just a profit that matters. There's many factors to consider. There's expected profits and revenue. There's margins, costs to consider.Another key metric is the rate of growth of revenue and profits.Example. Company X made 10 million in profits in Year #1. Company X made 20 million in profits in Year #2. This is great, profits exist and increased 100% Company X made 21 million in profits in Year #3. Profit still existed, by why did profits only increase $1 million over the previous year? Why did profits only rise 5% this year. All sorts of factors could be at play. This could really drive down the stock price, but if this was expected, understood and priced into the stock price the price may not move on this news.


    but with google we know why profits don't increase ad infinitum, they reached a saturation point.
    and we know why profits are down. lawsuit fighting, spending on infrastructure and further r&d
    its not like google is a new company, and the market has tons of competitors, they really do corner the best and free parts of the internet.

  • 0 Hide
    wemakeourfuture , October 21, 2012 2:25 PM
    alidanbut with google we know why profits don't increase ad infinitum, they reached a saturation point.and we know why profits are down. lawsuit fighting, spending on infrastructure and further r&dits not like google is a new company, and the market has tons of competitors, they really do corner the best and free parts of the internet.


    Ok, so if you know these things then you should know the price is going down.