It is evident that the Russia-Ukraine war has hampered businesses. Google's parent company Alphabet reveals the advertising sales on its YouTube platform have been hurt in the first quarter. The platform made a fortune in the wake of the COVID-19 pandemic in early 2020 and later in 2021 as people were forced to stay at home and shops were forced to reach customers through various online platforms.
Following nearly two years of pandemic restrictions, governments have allowed the functioning of businesses and tourism as before and with enough relaxations, but the sales have been hit hard due to product shortages, rising inflation and the Russian invasion of Ukraine. These have led to spending less on marketing campaigns.
Alphabet CFO Ruth Porat said it is still early to predict whether the sales graph may move up or the strengthening of the USD may make the situation further pathetic.
Shares of the company were up about 90 percent in 2020 and 2021, but in recent months a drop of about 2.5 percent has been witnessed.
Meanwhile, Aptus Capital Advisors portfolio manager David Wagner voiced concerns related to the macro environment saying Alphabet is an insulated company in the ad space like one may own the best residential house in a neighborhood that is the worst place to live.
Refinitiv, which tracks the financial analysts of companies, pointed out that it is the first quarterly sales miss since Q4 or 2019. The target was $7.5 billion while the report reveals sales of $6.9 billion.
Porat added that the Russia-Ukraine conflict had an outsized impact on the advertisement sales on YouTube as ad sales were stopped in Russia.
Meanwhile, the other significant revenues of Alphabet come from mobile apps, subscription sales and hardware sales. The target in these segments was $7.3 billion, but the sales touched $6.8 billion. The quarterly profit for the company was $16.44 billion, which is $24.62 per share.
Insider Intelligence writes Google may grab 29 percent online ad market share this year.