Google owner Alphabet sees advertising revenue soar during pandemic

Liam Roche
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Google owner Alphabet sees advertising revenue soar during pandemic

Alphabet’s operating profits more than tripled to $19.4bn

Google owner Alphabet (NASDAQ:GOOGL) announced record-breaking Q2 revenues on Tuesday evening as the firm continued to benefit from the pandemic.

Alphabet far exceeded its expectations, recording second quarter revenues of $61.9bn, up 62% compared to the same period a year ago.

The jump reflects a rise in online activity by consumers, in particular an 83.7% increase in ad revenue generated from YouTube.

Alphabet’s operating profits more than tripled to $19.4bn, as its operating costs rose 33.2%, while its headcount increased by 13%.

That was entirely driven by strong results in the core Google Services business, which includes; Android, Chrome, Maps, Play, Search and YouTube. Sales in that business rose 63.1% to $57.1bn, while operating profits rose 134.2% to $22.3bn. Traffic Acquisition Costs in the division rose 63.3% to $10.9bn.

Thomas Philippon, an economist and professor of finance at New York University, told The Guardian that people have been pushed to use the services of tech companies during the pandemic.

“They were already on the rise and had been for the best part of a decade, and the pandemic was unique,” Philippon said. “For them it was a perfect positive storm.”

The Alphabet share price rose by 3.2% in after-market trading.

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown: 

“With confidence returning to economies inching out of lockdowns, marketing departments are loosening the purse strings. As the sales of goods and services move online, Google is gathering an ever-increasing share of global advertising spend. That means Google is enjoying a growing share of a pie that is itself expanding quickly. A rising tide lifts all boats, but Google is a veritable hovercraft compared to the familiar names of the ‘old media’.”

“As a software platform provider, Alphabet enjoys incredible operating leverage, which is to say its revenues feed through to profits at a pace other companies could only dream of. That’s true at the cash level too, and as a result the group’s maintained a net cash pile of well over $100bn despite buying back $24.2bn of shares in the quarter.”

“Spectacular growth, incredible cash generation and multiple category killing products all at a fairly reasonable 30 times future earnings. It’s difficult to find things not to like at Alphabet.”A

Apple outperforms market expectations yet fails to galvanise investors

Liam Roche
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0
Apple outperforms market expectations yet fails to galvanise investors

Apple’s operating profits increased by $11bn to $24.1bn

Apple (NASDAQ:AAPL) profits soared as the world economy comes away from the pandemic that served to benefit major technology companies last year.

Q3 net sales rose by 36% to $81.4bn compared to the year before, while each location reported record levels of revenue.

Apple outperformed market expectations with its results, as iPhone sales rose by 49.8% to $39.6bn, while Mac and iPad sales increased by 1.3% and 11.9% respectively to $8.2bn and $7.4bn.

The Americas remains Apple’s largest market, from where 44% of its sales were made at a value of $35.9bn.

Greater China saw the biggest increase in sales of $14.8bn, up 58%.

Earnings announced by Apple showed that demand for gadgets and other such products improved recently, suggesting that the American tech giant is reaping the benefits as the world recovers from the pandemic.

The higher sales also mean a 20.2% increase in Research and Development spending, while operating profits increased by $11bn to $24.1bn.

Apple announced a quarterly dividend of $0.22 per share.

Despite the impressive results, Apple shares remained flat in after-hours trading.

Sophie Lund-Yates, Senior Equity Analyst at Hargreaves Lansdown, said: 

“The problem with being the best is you risk becoming a victim of your own success. That’s what we’ve seen from the reaction to Apple’s results, where despite an exceptional performance, the market’s response has been somewhat muted.”

“The growth might be slower than last quarter, but you only have to look at the figures to appreciate Apple’s hardly in any trouble, quarterly revenues of over $81bn would put most businesses on the planet to shame. Almost any way you frame this picture, it looks good. That just goes to prove that heavy is the head that wears the crown,” said Lund-Yates.

New AIM admission: Northcoders set for training roll out

Andrew Hore
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New AIM admission: Northcoders set for training roll out

Northcoders Group offers software coding training and helps the students to gain employment. Demand for this training is enormous with the government estimating that 1.2 million technically skilled people will be needed by 2022. The knock-on effects of Covid-19 will only have accelerated this requirement.
This is a fragmented market and Northcoders can roll out its services in additional regions. This will be important for the growth of the company. There could also be acquisition opportunities.
Trading has improved this year and the Manchester and Leeds sites have reopened. Revenues to the en...

New AIM admission: GENinCode awaiting FDA approval

Andrew Hore
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New AIM admission: GENinCode awaiting FDA approval

GENinCode has a significant addressable market in the risk assessment and diagnosis of cardiovascular disease. There are already initial sales for the diagnostic products, but the company needs to show that it can build up demand in other markets, particularly the US.
The autumn should bring news about progress with FDA approval. That could boost the share price.
The shares did not get off to a good start and the price has fallen to 36.7p (36.4p/37p). That is despite positive news about clinical results for Thrombo inCode, a diagnostic for inherited thrombophilia and venous thromboembolism ris...

TomCo share price boosted on update from Utah oil plant

Liam Roche
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0
TomCo share price boosted on update from Utah oil plant

TomCo share price

The TomCo share price (LON:TOM) is up by 2.86% on Tuesday as the oil exploration company made an announcement regarding its proposed project in Utah. It is welcome news for the TomCo share price following a challenging month, as oil prices fell on OPEC+ negotiating its policy towards the commodity.

However, the TomCo share price is up since the beginning of the year by 8%. Over a four week period, between May and June, the TomCo share price nearly doubled on the back of the company receiving a draft FEED study and positive investor sentiment, while it confirmed it reached important production and sales markers. Today’s news represents another milestone for the AIM-listed company which could bode well for the TomCo share price moving forward.

TomCo partner completes trial work a Utah plant

TomCo confirmed that its joint venture with Greenfield Energy had successfully completed all planned trial work at asphalt Ridge in Utah. The oil company said that all the necessary data had been acquired for the front-end engineering and design (FEED).

A technical review of the existing operation at the Petroteq Energy pilot plant brought about estimated for operating costs in the region of $22 per barrel, based on 5,000 barrels of oil per day.

“The FEED study outlines better economics for the proposed plant than we initially envisaged, together with verification that the proposed technical approach is appropriate,” said chief executive of TomCo Energy John Potter.

“Greenfield’s focus remains firmly on completing the requisite due diligence on TSH II and its site in Utah and progressing the necessary funding package in order to, inter alia, pursue construction of an initial 5,000 bopd facility at the earliest opportunity.”

“These are very exciting times for TomCo as we look to realise Greenfield’s significant potential,” Potter added. The chief executive will be hoping the news is reflected in the Tomco share price in the months to come.

UK house prices now 30% above pre-financial crisis peak

Liam Roche
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0
UK house prices now 30% above pre-financial crisis peak

Zoopla says the average price of a property is now £230,700

UK house prices reached a new high last month, 30% above the peak prior to the 2008 financial crisis, according to property website Zoopla.

Zoopla also said that the average price of a property is now £230,700, 5.4% higher than June 2020.

The move comes as the volume of homes being placed up for sale is down by 25% during H1, compared to the first half of 2020.

Zoopla said it has seen can increase in the popularity of larger family-style homes, as demand for houses has more than doubled compared to the levels seen prior to the pandemic.

Supply and demand have been out of quilter since the beginning of the year, while there is no sign that supply levels will catch up soon, according to the property website.

“Demand for houses is twice as high as typically seen at this time of year between 2017 and 2019, accelerating away from demand for flats, creating a disparity in average price growth across the two property types,” Zoopla said.

“House prices are being supported in part by a severe shortage of homes for sale, with stock levels down some 25% in the first half of the year compared to 2020.”

Transaction levels are continuing apace, with agreed sales 22% up compared to the same point in 2020.

Additionally, the housing market in the capital is falling behind the rest of the country and looks set to carry on doing so.

The North East saw the highest level of growth at 7.3%, while Yorkshire and the Humber closely followed with 6.8%.

London’s market grew at a rate of 2.3%, 3.1% lower than the national average.

Grainne Gilmore, head of research at Zoopla, comments: “Demand is moderating from record high levels earlier in the year, but remains significantly up from typical levels, signalling that above average activity levels will continue in the coming months. 

“Demand for houses is still outstripping demand for flats. To a certain extent this trend will have been augmented by the stamp duty holiday, with bigger savings on offer for larger properties – typically houses.”

FTSE 100 feels the pressure from all angles on Tuesday

Liam Roche
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0
FTSE 100 feels the pressure from all angles on Tuesday

The FTSE 100 is down by 0.92% during the morning session on Tuesday as Reckitt delivered a disappointing trading update, in addition to weakness among mining stocks.

“It’s no surprise to see Unilever fall in sympathy with Reckitt as investors are likely to be questioning the true defensive characteristics of these consumer goods companies. Yes, their products may be in demand during good and bad economic conditions, but that doesn’t mean profit margins can’t be squeezed,” says Danni Hewson, financial analyst at AJ Bell.

As reported yesterday, sentiment towards Chinese companies worsened as the government continues too come down on tech firms. Hong Kong’s Hang Seng index fell 4.5% with some of the big tech stocks weighing on the index including delivery platform Meituan down 15% and internet giants Alibaba and Tencent both declining by approximately 8%. “Those movements weighed on FTSE 100 investment trust Scottish Mortgage which has stakes in all three companies,” said Hewson.

“It’s been a difficult year for investors in Chinese stocks due to regulatory interference. This has been an underappreciated risk for companies where most of the attention has been on the fast levels of revenue growth.”

“Another bout of US companies will report earnings later today including Alphabet, Apple and Microsoft and a strong showing from them could encourage some investors to ditch Chinese tech names in favour of the more familiar US names. However, regulatory intervention also remains a big risk to this part of the market, as concerns grow over the largest players having too much power.”

FTSE 100 Top Movers

Croda International (4.24%), Just Eat (1.89%) and Segro (0.67%) are elating the way on the FTSE 100 on Tuesday out of the few companies to be in the green.

At the bottom end, Reckitt (-8.55%), Informa (-3.64%) and Intermediate Capital Group (-3.23%) are the biggest fallers during the morning session.

Moonpig sales and profits double thanks to pandemic

Liam Roche
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0
Moonpig sales and profits double thanks to pandemic

Moonpig made an adjusted profit before tax of £92m

Moonpig confirmed on Tuesday that both its annual sales and profits have doubled as the greetings cards company released its first set of results since its IPO in February.

The company said it benefited from an increase in spending during the pandemic.

Moonpig‘s revenue climbed to £368m in the year to April, an increase of 113% compared to 12 months ago.

The firm made an adjusted profit before tax of £92m, up from £44m a year before.

Moonpig’s profit levels came in at the top end of its guidance which it established when it floated back in February.

However, the Moonpig share price is down by 6% on Tuesday to 399.1p per share.

The online retailer said will continue to scale as it is retaining customers acquired over the past year.

The group will make investing in marketing and market share capture over profit margin a priority, targeting annual revenue growth of around 15% and an adjusted underlying earnings (EBITDA) margin of 24-25% in the medium-term.

“Our customer proposition continues to improve, with enhancements to our card and gifting ranges, and more delivery options than ever before,” said Moonpig chief executive, Nickyl Raithatha.

“The long-term growth opportunity remains vast, with the majority of the card and gifting market still offline, and we have never been in a better position to capture this growth.”

In the next year, sales are expected to grow by half and reach between £250m and £260m.

Tesla profit soars as car sales boom despite chip shortages

Liam Roche
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0
Tesla profit soars as car sales boom despite chip shortages

Tesla delivers a record 200,000 cars to customers

Tesla (NASDAQ:TSLA) has revealed that its profits surged during the last quarter, despite supply problems caused by shortages of semiconductor chips among other issues.

During the previous quarter ending in June, its sales rose to £8.6bn, up from £4.3bn the year before.

Over the same time period the electric car manufacturer delivered a record 200,000 cars to customers.

Tesla confirmed that its profits improved thanks to the strong level of sales.

Profits during Q2 were £800m, up from £75.5m last year, thanks in part to sales of its Model 3 sedan and Model Y.

The results came as carmakers across the world found it difficult to deal with demand thanks to a shortage of semiconductors.

“Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it,” said Elon Musk, Tesla’s chief executive. “Fear of running out is causing every company to over-order – like the toilet-paper shortage, but at epic scale.”

The company adapted, using other suppliers, while the supply issue has not discouraged customers from wanting Tesla cars.

“Public sentiment and support for electric vehicles seems to be at a never-before-seen inflection point,” the company said in a statement.

The Tesla share price closed on Monday up by 2.21%.

Tesla also revealed that losses from bitcoin offset some of the money it made from its car sales.

The carmaker stomached a loss of $23m on its bitcoin holdings over recent weeks.

Having purchased $1.5bn worth of the cryptocurrency during Q1 of this year, Tesla did not buy or sell any digital assets during Q2.

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