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Comment by bwb | Hacker News Reader

This seems like a bit of a non-story in some ways. Their revenue was up slightly YOY, and after that crazy huge quarter and the economic slow down this seems like a non-deal.

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It doesn't mean the sky is falling, but may indicate a shift in attitude within Google as their costs grow faster than their revenues.

Given that Google dominates email, search, browsers, phones, creator video, and a laundry list more things... it's definitely indicative of a story.

1 quarter... i just find this perplexing given the short term focus. If it was a trend maybe 3 or 4 quarters indicate something. This is nothing.

Costs grew due to a hiring binge (that can be easily stopped, or even reversed - it’s entirely in Google’s hands) and to increased costs for their data centers (hardware, electricity) which are cyclical. There’s no indication so far of any fundamental long-term changes to the cost structure.

It's hilarious how often nearly this exact quote appears at the top comment in any bad news that shows up on the front page.

Sure this isn't the end of the world but clearly the market doesn't believe this is a "non-deal".

We're also absolutely seeing a broader shift in the tech space, and traditionally companies like Google have been more immune to market changes than others.

But of course the current mantra of HN is "this is fine", it's part of a broader trend of denialism in the community that major shifts, towards things being worse, in many parts of our lives are happening.

I don't understand, it was down 7% today, that is no big deal in the grand scheme of things. Over the next 5 years do you think this matters at all to Google given their domination in so many areas?

IE, why is this story on the front page of HN and why is it important? What is the narrative you get from this?

Nobody can predict the next five months let alone the next five years.

> it was down 7% today

9.63% actually

> that is no big deal in the grand scheme of things

I'm not sure how you are making this claim. Today is the 2nd largest single daily drop in GOOG in the last 10 years the company (as a precent).

The 1st largest drop was on 3/16/2020 The 3rd was on 3/12/2020

That means we are seeing early pandemic level drops in a price over an earnings call.

Both of those other drops where due to systemic shocks to the market, this drop reflects just GOOG.

So this is arguably the largest single day decline in the share price of GOOG due solely to their own performance, not do to macro trends.

> why is this story on the front page of HN and why is it important?

As already answered this is a historic decline in the price of GOOG.

> What is the narrative you get from this?

The larger story is that we're seeing a down turns in all the companies that where the hallmark of the current tech boom. The term FAANG originated because those stock were seen as incredibly strong, high growth stocks.

The big part of this story is, as I have mentioned, these companies aren't losing value because of an industry trend that is equally effecting all stocks (that's happening as well) but because of their own individual performance.

Wall St doesn't tend to see a 27% drop in profitability as a non-story. The 6% YoY growth was probably expected, but that's a dramatic rise in expenses.

6% revenue growth is atrocious for Google and also a bad signal for the broader economy because it means companies are drastically cutting back on ad spend

Which is normal for an economic slow down right? Ad market always gets hit first?

Online advertising as a market is growing faster than Google's revenue. The real story here is that for the past year or so, they have been getting away with milking YouTube users with increasing numbers of ads, and now the consumers are rejecting that.

Growth was like 50% last year. They're just coming back to earth in a post pandemic world. In fact growing revenue at all now that people spend so much less time on their computer seems like a huge win to me, now they just need to control costs.

Main point of concern seems to be that online advertising is still growing 10-20% YoY but Google revenue only grew 10% for search ads and 3.8% for youtube. So their share of ad spending is declining.

I don't believe that for a second, do you really think that is what these numbers show?

Their stock price dropped ~9% on the news, which is pretty significant. These numbers are much worse than investors were expecting.

Meh. Not really seeing a 1 day bet change being that important.

If Google had announced that this would happen a quarter ago, then it would be a non-story.

They failed to achieve their own predictions on both EPS and revenue, by quite a bit on EPS, and that is indeed a story.

Google doesn't provide forward guidance. Any EPS estimates are done by financial firms.

This is true of every company. The guidance number just gives the financial firms a baseline.

Pretty much. The level of "a-ha! this confirms all my priors!" logic in these threads is just deafening.

Look everyone: economies are cyclic. We had a boom. Now we're in a downturn. It's happened before, many times. It will happen again. Nothing happening today is remotely as scary as what we saw in 2008, frankly isn't nearly as disruptive as the 2001 crash.

Google will be fine. The tech industry will be fine. Buy the dip, if you're into that sort of thing.

> Nothing happening today is remotely as scary as what we saw in 2008

As what's happening "today" is basically a postponed and amplified version of what should have happened in 2008, I have to disagree.

Unemployment numbers at extreme lows as the Baby Boomers retire and millions of Americans are either dead or sick/disabled with Long-COVID19, hampering our economy with a lack of workers?

I don't think today's economy is anything like the frothy housing bubble was in 2007/2008 timeframe.

I think there's a possibility of a tech bubble akin to 2001, but that actually wasn't very disruptive for our economy. I see today more similar to 2001, aside from the weird supply chain issues due to a greatly diminished workforce (the Baby Boomer's retirement is the biggest challenge for this year IMO). (Of course, people have been calling a bubble in tech for decades now, but _eventually_ that damn tech bubble will pop again, lol)

Forum commentators have predicted 100% of every collapse would be no big deal. 2008 wasn't just one thing: it was a cascade failure that progressed over the course of months. Nobody really knew how bad it was until we were down to the wire looking at a complete collapse of the financial system. Every downturn potentially breaks something big that was built on the assumption of infinite growth and had its tendrils into too many parts of the economy.

edit to add: we already see a drying up of ad spends. What happens in an economy built on selling ads, or selling services to people who sell ads when ads sales fail to meet expectations for too long? Everyone forgets data-driven advertising is what saved tech after the crash. Public opinion is rapidly turning against that savior.

as long as people consume stuff, they will be shown ads

We're seeing historic reductions in the consumption of stuff too. A lot of people don't realize that pandemic stimulus checks in the US were being spent like extra pocket money (a lot of people bought durable goods with it), and now that there is no pretense to give out more money, consumer spending is likely to be lower than it would be without those checks.

things will balance out, people will consumer fewer of luxury goods, will consume more of cheaper stuff.

Brands will keep spending to keep their customers, and cheaper alternatives will keep spending on ads to promote their sales.

In competitive market and free economy ads are a fundamental engine that will keep economy running. Ads is sort of toll booth that takes their cut no matter what

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