Google's earnings report has $SPCXB tucked inside: earnings per share were down $0.55, and Lao Niu has already done the math
Google took a hard hit. Lao Niu remains bullish and started with a small position around 282. At 15:33 Beijing time, Google's perpetual contract was trading at 282.15, down 3.50% over 24 hours. In last night's US session, the stock fell 12.64% to close at 283.82—its worst day since going public—with about $500 billion wiped off its market value.
Most people have probably already seen why it got hammered: third-quarter search revenue rose 12% to $63.35 billion, but fell short of expectations; free cash flow was negative $9.1 billion, including a €5.2 billion EU fine. Lao Niu is more interested in an inconspicuous figure in the books. On the earnings call, the CFO said the company posted an $8.2 billion loss under other income and expenses, mainly due to a mark-to-market loss caused by SpaceX's share price decline in the third quarter. By the company's own calculation, this kind of investment loss reduced earnings per share by $0.55.
Google invested $900 million in SpaceX in 2015. By the end of June, it held 551 million shares, making it SpaceX's largest institutional shareholder since the company went public. For every dollar SpaceX falls, Google's books lose more than $500 million; the same math works in reverse when it rises. Cloud revenue this quarter was $30.7 billion, up 103%, with a backlog of $560.8 billion. It's true that AI is taking a bite out of search, and Lao Niu won't pretend otherwise. But with search, cloud, and a substantial stake in SpaceX all in the mix, I think the current price is a bargain.
It'll take several more quarters to get a clear picture of Google's financials. Lao Niu is buying it partly as a way to get a window into SpaceX, and plans to read the company's earnings call transcript from beginning to end this weekend. This plan is something Lao Niu wrote for himself; it isn't investment advice. Everyone is responsible for their own gains and losses.
$GOOGLB #美国中期选举倒计时，美股博弈窗口已开启？
Google took a hard hit. Lao Niu remains bullish and started with a small position around 282. At 15:33 Beijing time, Google's perpetual contract was trading at 282.15, down 3.50% over 24 hours. In last night's US session, the stock fell 12.64% to close at 283.82—its worst day since going public—with about $500 billion wiped off its market value.
Most people have probably already seen why it got hammered: third-quarter search revenue rose 12% to $63.35 billion, but fell short of expectations; free cash flow was negative $9.1 billion, including a €5.2 billion EU fine. Lao Niu is more interested in an inconspicuous figure in the books. On the earnings call, the CFO said the company posted an $8.2 billion loss under other income and expenses, mainly due to a mark-to-market loss caused by SpaceX's share price decline in the third quarter. By the company's own calculation, this kind of investment loss reduced earnings per share by $0.55.
Google invested $900 million in SpaceX in 2015. By the end of June, it held 551 million shares, making it SpaceX's largest institutional shareholder since the company went public. For every dollar SpaceX falls, Google's books lose more than $500 million; the same math works in reverse when it rises. Cloud revenue this quarter was $30.7 billion, up 103%, with a backlog of $560.8 billion. It's true that AI is taking a bite out of search, and Lao Niu won't pretend otherwise. But with search, cloud, and a substantial stake in SpaceX all in the mix, I think the current price is a bargain.
It'll take several more quarters to get a clear picture of Google's financials. Lao Niu is buying it partly as a way to get a window into SpaceX, and plans to read the company's earnings call transcript from beginning to end this weekend. This plan is something Lao Niu wrote for himself; it isn't investment advice. Everyone is responsible for their own gains and losses.
$GOOGLB #美国中期选举倒计时，美股博弈窗口已开启？
