As we wait for Google’s parent company, Alphabet (GOOGL), to release its third-quarter 2021 results on October 26, the company seems to be well poised for another strong quarter. The company had crushed the prior quarter (2Q21) with a 62% year-over-year revenue jump and a 169% year-over-year surge in adjusted earnings per share.
However, there are a few headwinds that might have kept Alphabet from performing to its full potential during the third quarter. For instance, never-ending litigation issues have plagued the company. After battling antitrust lawsuits last year, the company was slapped with a fresh lawsuit days into the third quarter. This time, state attorneys alleged that Alphabet unfairly took 30% commission from buyers who purchased subscriptions and digital content on Android phones, taking undue advantage of its dominance in the Android market.
Moreover, in the earnings call for the second quarter, management had projected lower foreign exchange tailwinds in 3Q21, compared to the prior-year quarter. Additionally, an increased headcount, due to seasonal hiring of graduates, is expected to have elevated costs to the company.
Nonetheless, these headwinds do not seem to deter Credit Suisse analyst Stephen Ju from his optimism about the company. Ju reiterated a Buy rating on Alphabet with a price target of $3,400, ahead of the soon-to-be-released results.
The analyst took into account Google’s recent announcement of the upgrade of its mobile SERP (search engine results page) to “infinite scroll.” This will give increased visibility to a greater number of sponsored links as users scroll through search results. Ju contends that this capability will help Google manage its Search revenue growth better and for a longer period of time.
Other than that, the introduction of Free Listings on the Shopping Tab has encouraged Ju about the prospects of Alphabet in the third quarter. He believes it to be a critical move to onboard more merchants, as well as enhance users’ shopping experience and purchase potential.
Moreover, other consistent tailwinds, like the expanding Google Cloud business, strong traction in Google’s mobile search, and focus on AI technique innovations and consequent key partnerships, are also expected to have positively influenced third-quarter performance.
Website Traffic and Alphabet’s Business
In the online world, every website visitor increases the visibility of the business, its new features, and its products and services.
Evidently, Alphabet’s (or should we say, Google’s) business thrives on traffic. Whether it’s inbound traffic or traffic directed towards third-party websites, website traffic is indubitably an important aspect of the company’s business.
So, what does the above discussion mean for Alphabet’s business? The TipRanks’ Website Traffic tool, which analyzes website traffic volume data provided by Semrush (SEMR), helped us gain some valuable insights into the tech heavyweight’s standing ahead of its Q3 release.
Here’s what we observed:
Traffic Details
Website traffic trends looked encouraging as we dug into the data. In 3Q21, the number of total unique visitors using all devices was recorded as 8.8 billion. This figure climbed 11.46% from the year-ago third quarter.
Furthermore, when we compared the number of total unique visitors to Alphabet’s website on a year-to-date basis, i.e., the period from January 2021 – September 2021 against the same period last year, a gain of 6.77% was seen.
The Dynamics of User Geography
A massive number of people around the world use at least one of Alphabet’s services in their daily Internet-influenced lives. Thus, we can evaluate website traffic data by region for deeper insights into consumer behavior.
The U.S. enjoyed the largest share of total user traffic for September, at 32.2%. Meanwhile, India’s users accounted for 4.9% of the total number of visits, putting the country in the second position.
Looking at the previous year’s third-quarter data and comparing that to this year’s trends, we saw that the U.S. total unique visitors fell 5.12%, while global non-U.S. unique visitors surged 18.42%.
Wall Street Weighs In
Earlier in the article, we discussed Ju’s optimistic sentiment on Alphabet and the reasons behind it.
The sentiments of the rest of the Street seem to resonate with Ju, with a Strong Buy consensus rating on Alphabet, based on 31 unanimous Buys. At $3,209.24, the average price target implies 16.74% upside potential.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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