YouTube’s sudden shift to regulatory compliance hits Alphabet (GOOGL): $70 billion
Google’s parent company Alphabet’s stock fell more than 8% on Tuesday, and the company blames YouTube -- which saw a fall in ad revenue growth of just 15% versus 24% last year.
In Q1 2018, Google began making changes to YouTube’s algorithms that were designed to prevent toxic content from appearing in the recommended videos feed. The aim was to make it harder for users to find conspiracy videos, fake news and such similar waste that repel advertisers. Instead, the algorithm will guide users to more authoritative sources bringing accurate information. Additionally, YouTube has removed millions of channels and videos from its platform that are detrimental to its content policies, for example Alex Jones.
But this proved to potentially be counter-productive, as all the negative content kept engagement high. Investors believe this may not be the only cause of ad revenue decline and the subsequent hit to the stock price. Many suspect other undisclosed factors that could be at work, but YouTube’s sudden shift to responsibility and safety and compliance with content regulations seem to be the top cause as of now.
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Notable companies
The most notable companies in this group are Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Spotify Technology SA (NYSE:SPOT), Baidu (NASDAQ:BIDU), Pinterest (NYSE:PINS), Tencent Music Entertainment Group (NYSE:TME), Snap (NYSE:SNAP), Twilio (NYSE:TWLO), Zillow Group (NASDAQ:Z).
Industry description
Companies in this industry typically license software on a subscription basis and it is centrally hosted. Such products usually go by the names web-based software, on-demand software and hosted software. Cloud computing has emerged as a major force in this space, making it possible to save files to a remote database (without requiring them to be saved on local storage device); as long as a device has access to the web, it can access the data and the software programs to run it. This has in many cases facilitated cost efficiency, speed and security of data for businesses and consumers. Alphabet Inc., Facebook, Inc. and Yahoo! Inc. are some well-known names in the internet software/services industry.
Market Cap
The average market capitalization across the Internet Software/Services Industry is 60.93B. The market cap for tickers in the group ranges from 1.11K to 1.94T. GOOGL holds the highest valuation in this group at 1.94T. The lowest valued company is MSEZ at 1.11K.
High and low price notable news
The average weekly price growth across all stocks in the Internet Software/Services Industry was -1%. For the same Industry, the average monthly price growth was -0%, and the average quarterly price growth was 2%. TRFE experienced the highest price growth at 53%, while QQQFF experienced the biggest fall at -58%.
Volume
The average weekly volume growth across all stocks in the Internet Software/Services Industry was 15%. For the same stocks of the Industry, the average monthly volume growth was 9% and the average quarterly volume growth was -8%
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Valuation Rating: 45
P/E Growth Rating: 72
Price Growth Rating: 59
SMR Rating: 84
Profit Risk Rating: 92
Seasonality Score: -6 (-100 ... +100)