Where Will Alphabet Be in 3 Years?
With two consecutive quarters of negative GDP, it's becoming more clear that the U.S. economy is slowing. While there is some disagreement about whether we are in a recession (recessions aren't official until the National Bureau of Economic Research says so), The sustained negative GDP doesn't bode well for businesses, including those focused on advertising.
The advertising budget is one of the first expenses to get cut by a business during difficult economic periods. Investors have noticed this fact and begin to shun stock from any company that primarily derives its revenue from advertising.
This goes a long way to explaining Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOG) stock price drop in 2022, as it is down more than 21% from its all-time high. It also partly explains why the stock rallied about 10% on the day following the release of its second-quarter earnings as news about ad revenue was encouraging.
Source Fool.com
