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Google is obviously still a very strong business but in terms of stock price performance all that matters right now is forward guidance. Meta signaled last quar

Google is obviously still a very strong business but in terms of stock price performance all that matters right now is forward guidance. Meta signaled last quarter that their macro outlook was that ad spend was going to decline. That seems plausible, especially for ads targeted at consumers who are getting hit by inflation. Google might be plateauing and all the stock buybacks in the world might not help even at the current multiples that are much more appealing than 6 months ago. We shall see.

baskethead 4y ago
The reason why forward guidance matters is because of valuations. Google PE is over 20 as of close of day. Entire S&P 500 PE is 15 and even that is traditionally high. If Google's PE reverts to the S&P500, you're talking a 20% cut just from here. Forward guidance and consistent growth is what mutual funds will pay a premium for. Lots of companies have a ton of room to drop if PE ratios drop.
- HFguy 4y ago
  FWIW, sp500 forward pe more like 18
- riku_iki 4y ago
  > Entire S&P 500 PE is 15 Google demonstrates steady 25% y/y grows for 20 years already, most of SP500 probably doesn't.
  - colinmhayes 4y ago
    Which is why guidance matters... Most companies are just expected to grow barely faster than inflation, which isn't too hard. But companies with high PE are expected to grow much faster. It's not this quarters revenue that matters, but future ones. Guidance is about future quarters. Sour guidance means you're no longer a rocketing tech company.
jsnell 4y ago
> all that matters right now is forward guidance Have they ever offered guidance? I thought they didn't do it basically as a matter of policy. So it seems hard to believe that it's what matters.
- rubiquity 4y ago
  You are right, they don't. Whether Google gives it or not, the market will try and figure it out on its own. In this environment that could be bad for Google.
riku_iki 4y ago
> Google might be plateauing Revenue increased by 23% y/y. Google revenue increased by 24% y/y in Q1 2012. Looks like it is plateauing for decade already.
- rubiquity 4y ago
  Fair point but 2022 and 2012 are very different environments.
  - deleted 4y ago
    [deleted]

baskethead 4y ago

The reason why forward guidance matters is because of valuations. Google PE is over 20 as of close of day. Entire S&P 500 PE is 15 and even that is traditionally high. If Google's PE reverts to the S&P500, you're talking a 20% cut just from here. Forward guidance and consistent growth is what mutual funds will pay a premium for. Lots of companies have a ton of room to drop if PE ratios drop.

HFguy 4y ago
FWIW, sp500 forward pe more like 18
riku_iki 4y ago
> Entire S&P 500 PE is 15 Google demonstrates steady 25% y/y grows for 20 years already, most of SP500 probably doesn't.
- colinmhayes 4y ago
  Which is why guidance matters... Most companies are just expected to grow barely faster than inflation, which isn't too hard. But companies with high PE are expected to grow much faster. It's not this quarters revenue that matters, but future ones. Guidance is about future quarters. Sour guidance means you're no longer a rocketing tech company.

jsnell 4y ago

> all that matters right now is forward guidance Have they ever offered guidance? I thought they didn't do it basically as a matter of policy. So it seems hard to believe that it's what matters.

rubiquity 4y ago
You are right, they don't. Whether Google gives it or not, the market will try and figure it out on its own. In this environment that could be bad for Google.

riku_iki 4y ago

> Google might be plateauing Revenue increased by 23% y/y. Google revenue increased by 24% y/y in Q1 2012. Looks like it is plateauing for decade already.

rubiquity 4y ago
Fair point but 2022 and 2012 are very different environments.
- deleted 4y ago
  [deleted]