This week was one of the darkest days for Google’s parent company Alphabet in the last six years, as the huge drop in share value was observed due to the slow quarterly revenue generation. The company revealed that the possible reasons behind the slowest revenue generation in the last three years are the rising competition in the ad business and wobbling smartphone business.
Alphabet’s Google observed slowest revenue growth for Q1 2019, in three years due to the increased competition in advertising, staggerness in its smartphone business, and the interrupting variations at YouTube, which suppressed the chief Internet ad company, lagging contenders.
After the extensive one-day-fall, Alphabet’s shares dropped by 7.5% after hours of trading. After more than six years, the huge decline in share price has been noticed.
Alphabet’s CFO Ruth Porat mentioned the cause of slower revenue growth were strong competition, currency fluctuations, and unstated product variations. Along with this, advertisers are continuously pressurizing Google to set restrictions on its rapidly growing YouTube video service.
Alphabet receives 85% of its revenue from Google’s advertisement business. The company earns by selling links, commercials, and banners across its own apps & websites along with those of associates’.
Key contenders generating revenue through ads, such as Amazon, Snap, Twitter, and Facebook all were above or equivalent to the expected quarterly revenue figures released by the analysts.
Compared to the revenue generated by Alphabet in Q1 2018, this time 17% (around $36.3 Billion) of growth has been reported. However, it failed to achieve the expectations ($37.3 Billion) set by Wall Street. Though the quarterly revenue grew by 17%, in the past three years, it is the lowest value recorded.
Google also struggled in selling its exclusive Pixel brand smartphones due to the intense competition in the premium range of smartphone devices. Owing to the poor sales performance, the company is expecting to introduce the devices in the market with discounted prices.
Apparent revenue-generating services and gadgets manufactured by Google have lagged in the market share, such as Google Cloud and Google’s consolidated hardware unit.