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Google’s share price (NASDAQ:GOOG) launched like a rocket to reach a record high in early morning trading upon its second quarter operating results. Those results were so overwhelming that Google nearly single-handedly pulled the entire NASDAQ index (NASDAQI:COMPX) with it to reach a new record high of its own.
Google hit a record high of 688.81, up 14.5% – and more than 100 points – from yesterday’s close of 579.85. Volume of shares traded so far is more than triple Google’s daily average (three month) of 1.8 million.
Ironically, the NASDAQ set a new record high yesterday, 16 July, before Google boosted it even higher this morning to a new intraday high of 5179.61 after having closed at 5163.18 on Thursday.
Reuters reported that “at least 24 brokerages raised their price targets on Google’s stock by as much as $150 to as high as $800.” This comes as a result of an astounding second quarter report, the first in over a year to exceed market expectations. And exceed it did!
Exceeding Expectations
Google inspired investors with a reported 11% increase in revenue for the quarter ended 30 June 2015 totaling $17.7 billion. Calculated at constant currency, the increase was 18%. Operating income grew 13% over the previous year as the company maintained a 27% operating margin. EPS improved from 5.98 to 6.99 year-on-year for the quarter, handily beating estimates of 6.74.
Revenue generated from Google websites increased by 13% or $12.4 billion year-on-year, continuing at 4% above the previous quarter.
Greater Expectations
According to Google CFO Ruth Porat, investors should expect even greater results as the company intends to keep generating superlative results by being “focused every day on developing big new opportunities across a wide range of businesses.” But, it appears that her next statement was warmly received, as it added credibility to her promises for the future: “We will do so with great care regarding resource allocation.” That is especially comforting when coming from the CFO.
Speaking on a conference call with investors, Ms. Porat emphasized “How we prioritize and focus on opportunities remains paramount, both for our employees, who remain inspired by the opportunity to work on the most cutting-edge developments with maximum global impact and for our shareholders.”
What To Expect
I like BGC analyst Colin Gillis’ perspective on the status and future of Google. He says, “This is not an expensive stock. You have multiple products and billions of users. The core business is part of the daily habits of billions of people around the world. When you look out, you see clear areas for growth. All you really wanted was a sense that there would be some process and control brought into the company and now you have it.”
At 11:00 a.m. in New York, Google continues to hold at 663.08, up 14.39% from yesterday’s close, with its 50-day moving average climbing nearly vertical in order to catch up.
One More Insight for Perspective
Until yesterday, Google had traded below 575.00 for 10 months, and below 550.00 for the majority of time during that period, even dipping below 500.00 in January. Google shares are now trading at 22.5% above it’s 120 moving average.
